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Exploding The Phone 
Bibliographic Cover Sheet 

FBI Files 56-HQ-5059, 56-DL-198, 56-SA-185: Election Law 
(Gravvitt and Ashley matter) 

Date 1953-02-00 

Abstract Collection of FBI files regarding Thurl Gravitt and James Ashley. 

Keywords Thurl Gravitt; T.O. Gravitt; James Ashley; suicide; FBI; Dallas, TX; 
San Antonio, TX 

Notes Includes numerous newspaper clippings 

Source FBI via FOIA 


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U.S. Department of Justice 

Federal Bureau of Investigation 

Washington , D.C , 20535 

August 21, 2007 

FOIPA No, 1070385- 000 

The enclosed documents were reviewed under the Freedom of Information/Privacy Acts (FOIPA), Title 5, 
United States Code, Section 552/552a. Deletions have been made to protect information which is exempt from disclosure, 
with the appropriate exemptions noted on the page next to the excision. In addition, a deleted page information sheet was 
inserted in the file to indicate where pages were withheld entirely. The exemptions used to withhold information are marked 
below and explained on the enclosed Form OPCA-16a: 

Section 552 Section 552a 











D (k)(2) 







' o(k)(5) 






185 page(s) were reviewed and 139 page(s) are being released. 

□ Document(s) were located which originated with, or contained information concerning other 
Government agency(ies) [OGA]. This information has been: 

□ referred to the OGA for review and direct response to you. 

□ referred to the OGA for consultation. The FBI will correspond with you regarding this 
information when the consultation is finished. 

s You have the right to appeal any denials in this release. Appeals should be directed in 
writing to the Director, Office of information and Privacy, U.S. Department of Justice, 1425 
New York Ave., NW, Suite 11050, Washington, D.C. 20530-0001 within sixty days from the 
date of this letter. The envelope and the letter should be clearly marked “Freedom of Information 
Appeal” or “Information Appeal.” Please cite the FOIPA number assigned to your request so that it 
may be easily identified. 

□ The enclosed material is from the main investigative file(s) in which the subject(s) of your request was 
the focus of the investigation. Our search located additional references, in files relating to other 
individuals, or matters, which may or may not be about your subject(s). Our experience has shown, 
when ident, references usually contain information similar to the information processed in the main file(s). 
Because of our significant backlog, we have given priority to processing only the main investigative file(s). 
If you want the references, you must submit a separate request for them in writing, and they will be 
reviewed at a later date, as time and resources permit. 

b See additional information which follows. 

Sincerely yours, 

David M. Hardy 
Section Chief 
Dissemination Section 
Records Management Division 


Enclosed is a copy of the following files: DL 56-198, HQ 56-5059, and SA 56-1 85, which is responsive to 

your request. 



(b)(1) (A) specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign 

policy and (B) are in fact properly classified to such Executive order; 

(b)(2) related solely to the internal personnel rules and practices of an agency; 

(b)(3) specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute(A) requires that the 

matters be withheld from the public in such a manner as to leave no discretion on issue, or (B) establishes particular criteria for 
withholding or refers to particular types of matters to be withheld; 

(b)(4) trade secrets and commercial or financial information obtained from a person and privileged or confidential; 

(b)(5) inter-agency or intra- agency memorandums or letters which would not be available by law to a party other than an agency in litigation 

with the agency; 

(b)(6) personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy; 

(b)(7) records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement 

- records or information ( A ) could be reasonably be expected to interfere with enforcement proceedings, ( B ) would deprive a person 
of a right to a fair trial or an impartial adjudication, ( C ) could be reasonably expected to constitute an unwarranted invasion of personal 
privacy, ( D ) could reasonably be expected to disclose the identity of confidential source, including a State, local, or foreign agency or 
authority or any private institution which furnished information on a confidential basis, and, in the case of record or information compiled 
by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential source, ( E ) would disclose techniques and procedures for law 
enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such 
disclosure could reasonably be expected to risk circumvention of the law, or ( F ) could reasonably be expected to endanger the life or 
physical safety of any individual; 

(b)(8) contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for 
the regulation or supervision of financial institutions; or 

(b)(9) geological and geophysical information and data, including maps, concerning wells. 


(d)(5) information compiled in reasonable anticipation of a civil action proceeding; 

(j) (2) material reporting investigative efforts pertaining to the enforcement of criminal law including efforts to prevent, control, or reduce 

crime or apprehend criminals; 

(k) (l) information which is currently and properly classified pursuant to an Executive order in the interest of the national defense or foreign 

policy, for example, information involving intelligence sources or methods; 

(k)(2) investigatory material compiled for law enforcement purposes, other than criminal, which did not result in loss of a right, benefit or 

privilege under Federal programs, or which would identity a source who furnished information pursuant to a promise that his/her identity 
would be held in confidence; 

(k)(3) material maintained in connection with providing protective services to the President of the United States or any other individual pursuant 
to the authority of Title 18, United States Code, Section 3056; 

(k)(4) required by statute to be maintained and used solely as statistical records; 

(k)(5) investigatory material compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal civilian 
employment or for access to classified information, the disclosure of which would reveal the identity of the person who furnished 
information pursuant to a promise that his/her identity would be held in confidence; 

(k)(6) testing or examination material used to determine individual qualifications for appointment or promotion in Federal Government service the 
release of which would compromise the testing or examination process; 

(k)(7) material used to determine potential for promotion in the armed services, the disclosure of which would reveal the identity of the person 
who furnished the material pursuant to a promise that his/her identity would be held in confidence. 

FBI/ DO.) 


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To: SAC, San Antonio (50-NEW) 

From: Director , FBI 


s otmng g sTBHN bell telephone company; 


ReSAairtel 13/4/74. 

This witter dlnctiened with Grinina 1 Section of 
the Department of Juetlce, end Department advised wo i»f*n~ 
tlgation cheuld be instituted nt this tine. 






gsafpmr(41 cfr) ioi-i i.e 




date: 12/13/74 

from : SAC, DALLAS 



0 *. 

On 12/10/74, 1 j Attomag Antitrust 

Division, Washington, D„ C. , 20530 , telephone I | 

visited the Dallas Office to make inquiry as to whether invest! 
gation is being conducted by this Bureau into the matter in- 
volving the civil suit against Southv/estern Bell Telephone 
Company (SW Bell) by family of T. O. GRAVITT (deceased! and 

] former officers of 3W Bell. ex- 

plained tne U. S. Department of Justice is in the process of 
prosecuting an antitrust case against American Telephone and 
Telegraph (AT&T) and any irregular or improper activities on 
the part of SW Bell might be pertinent to the AT&T antitrust 
matter as it might involve the parent company. He said he 
came to Texas to determine if there are any aspects of the 
alleged SW Bell activities that are now known or can be 
develo ped that can contribute to the AT&T antitrust matter. 

said he had information that a Texas State Senate 
Committee is conducting hearings into aspects of SW Bel l 
activities and he wanted to make contact w it h / thaf'”b odv . 

l was told no invest igatio(T is bein^fc&hducted 
by the Dallas Office of the FBI, the civil suit in question was 
reportedly filed in San Antonio, Texas, and the San Antonio 
Office of the FBI had submitted a communication in the matter 

T„ O. GRAVITT. Former Vice Presiden t (deceased); I I 

f ISouthwestern Bell Telephone 



[ON LAW.' 

0/- Bureau (2 60-AmejpLcan Telephone & Telegraph 

(1 SG-New ^outhwestern Bell Tele phone Co. , Et Al) 

1 - San Antonio (56-New-Southwestern Bell Telephone Co. , Et Al) 

2 - Dallas (1 60-AT&T) i 

(1 56-198) - Mk \ ;« 

EEH : hm A " • 



78 DEC 26 i974 . 

Buy U.S . Savings Bonds Regularly on the Payroll Savings Plan 

DL 56-198 

- It' is noted the San Antonio communication 

referred to is San Antonio airtel to the Bureau with LHM 
dated 12/4/74. 

pnade a telephone call to the office of 

Texas Lt. Governor BILL HOBBY, Austin, Texas f and was , 
furnished the identity of and assured of contact with the 
Investigat or handling the matter before the Texas Senate Sub- 
committee. | I said he would travel to Austin, Texas, on 

12/11/74, to make contact with the representative of the sub- 
committee and then if advisable proceed on to San Antonio, Texas, 
to review the filings in the above r eferred to civil suit. In 
this regard, it is noted | | the family of GRAVITT filed 

a 29.2 million dollar damage suit against S’tf Bell in November 
1974, Various charges and count e rcharges have been made by 
both sides and this matter has gained widespread news media 

The above is to advise the Bureau and San Antonio 
of the interest in and activities of the Antitrust Division as 
it pertains to the AT&T antitrust investigation and the SW Bell 

- 2 - 


< u 



To: SAC, San (56 -NEW) 

Prom: Director, IfWl^ 

S J <e~S05V~ X 

UTTSTJBO ; w ^ v 




/Pi'f . 

ReSAairtel 12/4/74. 

This matter discussed with Criminal Section of 
the Department of Justice, and Department advised no inves> 
tigatlon should be instituted at this time. 

1 - Dallas 










1 5 






NOTE: By airtel dated 12/4/74, with copy to Dallas, 

SA submitted LHM reflecting that Gravitt was former 

I Vice President of Southwestern Bell Telephone Company, 
committed suicide on 10/17/74 and left a note alleging 
irregularities in connection with company's operations, 
including alleged irregular campaign contributions. 

A short time later |a Bell Telephone Company 
official, was terminated by his company. He also 
alleges Bell Telephone Company employees required to 
make political contributions. 

On 12/11/74 Departmental Attorney | 

advised that he previously was contacted by the appropriate 
Texas U. S. Attorney's Office regarding this matter and no 
determination had yet been made as to whether any inves- 
tigation would be requested. He stated no investigation 
should be conducted unless specifically requested by the 
Department, which has been confirmed by 0-70. 


(5) 7>"' 

*./' , ,<■ ' 



0-70 (ttav. 3-28-72) 





TO : Assistant Attorney General 

FROM : Director, FBI 

DATE: {Kfeaftfeg? 12, 3 ©74 

SUBJECT: tasioietw m&mcrst, 

mw$m 2 &tgm mu* wissnoss ammi 

A a&a mjAmm imzmmi i 

wwsmmmmrmm TEmmxm~wmm \ 

sam mmn®, ms 

Bit* Reference is made to : memorandum dated 

(your file ). 

There is enclosed one copy of i 
dated S2U&/ 1A at -fl&ft L M& M&Q. 

am ia a. 

A. □ This covers the preliminary investigation and no further action concerning 
a full investigation will be taken by this Bureau unless the Department so directs. 

B. □ The investigation is continuing and you will be furnished copies of 
reports as they are received. 

C. □ The investigation requested by you has now been completed, Unless 
advised, to the contrary no further inquiries will be made by this Bureau. 

D. [g Pursuant to instructions issued by the Department, no investigation will 
be conducted in this matter unless specifically directed by the Department. 

E. □ Please advise whether you desire any further investigation. 

F. □ This is submitted for your information and you will be advised of further 

G. □ This is submitted for your information and no further investigation will 
be conducted unless specifically requested by the Department. 

H. □ This covers the receipt of a complaint and no further action will be 
taken by this Bureau unless the Department so directs. 

Enc. X 

ea af a conversation with EJopari^niaX Attorney 
' on 18/ 1 5/74 therein he stated no invosrt lotion 

wsmnzi d* mietdd in tills natter at thXtt time ttnflX epaci^teaXly 
reijtteoted by tb® Departments 


* t 


5b- 5659-3 


SEP 1 6 1977 




7/i Reply, ['leasts Refer fo 
File j\o. 



0 1 *’ 


San Antonio, Texas 
December 4, 1974 







Mr. T. O. Gravitt, Former Vice President, South- 
western Bell Telephone Company, Dallas, Texas, was General 
Manager of the San Antonio Operation of the telephone 
company until early 1973. On October 17, 1974, he took 
his own life in Dallas and left behind a note in which he 
alleged gross irregularities in the company's operation. 

In part, he charged that telephone company executives were 
under orders to contribute to the company's favorite politicians. 
Mr. Gravitt' s personal records show he wrote five checks to 
politicians on April 30, 1974, and all five documents were 
subsequently cashed. 

These checks were written on Mr. Gravitt 's account 
at the First National Bank in Dallas, Texas, and were in the 
amount of $20 to the Cris Sirrtos Campaign Fund; $50 each to 
the Ben Atwell and Richard Geiger Campaign Funds; and $100 
each to the Dale Milford and the J. J. "Jake" Pickle Cam- 
paign Funds. Mr. Milford and Mr. Pickle are U.S. Congressmen 
for the State of Texas. 

who s e employment was terminated in November, i9 74 , stated 
he has paid money to politicians as a condition of employment 

This document contains neither recommendations nor 
conclusions of the FBI. It is the property of the FBI and 

is loaned to your agency; it and its contents are not toH^D *- — / 

distributed outside vour agency.' i if) Searc hed Z . ' 








with Southwestern Bell Telephone Company. He further stated 
the top men of the firm were given raises of $1,000 in 1966 
with the proviso that most or all of it g o back to the 
company in special political assessments.! | said 

when the law barring corporations from making political 
contributions was passed, the officials of the company wrote 
personal checks to various politicians according to instructions 
received from other company officials. 

r 5 

FD-36/(Rev, 5-22-64) 

Transmit the following in 


Date* 12/4/74 

(Type in plaintext or code) 




SAC, SAN ANTONIO (56-new) (P) 

UNSUBS? / f) 

T. 0. GRAVITT,0 Former 
Vice Pres.ifaent (DECEASED) ? 



. . / ■ 

Enclosed for the Bureau are four (4) copies and 
for Dallas, one (1) copy of a LHM concerning the captioned 
matter. Also enclosed for each recipient is one copy each 
of three (3) newspaper articles which appeared in the 
SAN ANTONIO EXPRESS NEWS on 12/1 and 4/74. 

For information of the Bureau, GRAVITT was 
formerly General Manager of the San Antonio Office of 
SWBTCo and became Vice President of the Texas Operation 
at Dallas in early 1973. On 10/17/74, he committed suicide 
at Dallas and alleged in a note to gross irregularities in 
the company's operation, including alleged illegal campaign 

contributions. A short time later, 

1 was terminated by the company for 
falsified expense vouchers and his alleged wrong doing 
within the scope of his employment. 

2 - Bureau (Encs. 7) 
L. - Dallas (Encs. 4) 
/2/- San Antonio 


(9 i- A- 

5h' ns-V 

Searched...... IMHHHIHMMi 

Serialized 4W&— — ... 
Indexed......*.-.— —..... 

Filed — 


Special Agent in Charge 

,M Per 

U.S. Government Printing Office: 1972 — 455-574;' 

SA 56-NEW 

I 1 b6 

|the family of GRAVITT filed a b7c 

$29.2 million damage suit against SWBTCo in November, 1974. 
Charges and counter-charges have been made by. both sides 
and this matter has gained widespread newspaper publicity. 
Depositions on this and related matters concerning the 
telephone company rate structure : are being taken in State 
Court at this time. 

In view of the above, it is recommended that 
this matter be referred to the Department for an opinion 
as to a possible Federal violation. No further action will 
be taken by the San Antonio Division pending Departmental or 
Bureau instructions. 


FD-350 ( R e,v , 7-16-63) 

(Mount Clipping in Space Below) 

(Indicate page, name of 
newspaper, city and state.) 





Date: 12-1- 74 






Classification: 3U>-IS5'-3 
Submitting OfficegAN ANTONIO 

r 1 Being Investigated 

(Mount Clipping in Space Below) 


Southwestern Bell's rate procedures in Texas would 
he “extremely difficult i'o defend./in. court 1 ’ because 1 
they have riot been in line with qtiidr;states, .thelate^? 
0. Gra.vitt wasvtold. p 

.This, \var ning of March 27V •• v 
T 973, came ; to Gravitt 1 s hor.tly 
after lie left (San Aritonip {ip 
b c com e . v ice^presicl ; en t >p£ 

Bell’s Texas operations: .< ’ Z 

‘‘There is no question but 
what the 'Southwestern ap- 
proach in' Texas irate cases t . is < 
out of step with its approach 1 in 
Missouri anci'Kansas and with 
that used -by' other Bell Sys- 
l cm companies,” said a work 
paper prepared over the 
name of J, M. .Good. 

The work paper by Good, 
then assistant yice president 1 
and rale expcrtTor Bell out of, 

S L. Lo uis-Jiead q u a r L e r s , a c • < ' 
com p a h ied; ami e rri o ran dum .to . 

Gravitt)f rbii^E : ; ;.C- (Smith , 
t lie n i ce' jlr eS { d e n t ? 6 f f r-jerye ri u e ; i 
requirqm en ts ?(Ta te- ipaki v' 

The :paper';said^ 
d c li t r ate /dp mplt afl 

present a ppr'oach • may 
become untenable.* 1 
‘/Serious consideration 
should be given to lowering 
the rate base arid expense 
claims and increasihg the 
rate of return. request'To a 
reasonable figure;” iksaid. 

The paper detailed various 
inconsistencies in the Texas 
rale proceed u res. Smith, .who 
like Good has since retired, * 
acknowled ged sending Gra- 
ven nernf 6 r lira t ion wli e n 


; 1 


asked’ about it -by the Dallas 
Morning -News. * /|q 

H e/ sa i d the reason, for 
sending the message: was be^ 
cause "it -was necessary for 

■ someone/in : authqrity;tp know 

■ the ;bi‘s lory • a n d/pyi jbie m s ..of 

^ate:ii.i%iiig’ -/%> •? "•'! v * ■';/& 

• ./Gnayitt-on’Oct: I7Veommitl 
. ; Te d, Vs life id e fat.his Dallas 
: hpnii e/iHe vwas/fo u rid;, cl eadf of 
/■ carbqnq^6noxfQ I & poison ing^ 

^ H b.\vvV‘».t\\' o .sons ari/d* 
|.v|(anids|Ss^ Saif 

j k; ^nlpnidp|^ /Ut& ' 

e 1 1 |f8tt^hVo $29 

ttv i jmffi cl pTmrngfG.navi tfis 
/ari^A^hT’eyis ppjiosit io n'3tiq 
com'ija n y T a te^p raclic es fe>: 

su n 

• which Ihoun ded'G yayi tt/to his 
death/and led/tb . t he/f i’Pi n ^ <Xf 

. /lii’Tlie/jii e mop ridii’m ; ; to 
GraVitt; Snrith;saidj:he vvanted 
Of Uy i it to bccomP unmlved 
“in solving certain jirobienis 
that T believe.are ’inherent.iii 
ou r present . appr oach to ra te 
case-proof in Texas 


\0' :,.V 

* V 

A' ' ^ 

(Indicate page, name of • 
newspaper, city and state.) 





Date; 12“ 1*“74 






Classification: ^ ^0 

Submitting Office:S AN ANTONIO 

| | Being Investigated 

SAti AMiU till' 



CO co 

{Mount Clipping in Space Below) 

Bill Hobby announced Thurcpg 
day lie has authorized an ex$ 
paneled investigation by thej 
vSenate Consumer Affairs Subr/ft 
committee into allegations. t 
against . Southwestern Beit' 
Telephone Co. • . 

“Information that may imj 
dicate widespread and illegal'^ 
invasions of privacy by South-g 
western Bell and law enforce-^ 
ment agenciesMs deeply dis|| 
turbing," Hobby said. p 

“I have authorized Seritrj 
(Ron) Clower (D-Garland) to§ 
dig as deeply into these matf^ 
ters as time allows, and to hire!^ 
the necessary staff," Hobb^ 

_ Glower is chairman of the§. 

(Indicate page, name of 
newspaper, city and state.) 





Date: 12 — 6 - 74 

Edition; FINAL HOME . 






Classification : 

Submitting OfUce:S AN ANTONIO 

I | Being Investigated 

>6 c 

, fjUz-. ,.j 

(Mount Clipping in Space Below) 


?BeHifeB^phone C^vexecutives-Turi'-^ '. 

i ' • -| v 1 ,V' - 

/nerea^Go^ * Tarrant' 1 

iCm^t^pohtica] ; racesi ; , through ^ 
ottfijc ilman ; •.a:/-compariy ',6fr > ' 
... ■ •■ ,;. 
j l^^yS^aUlt, ,BeU division, manager' for 
S^^^6M^;[revealed Wednesday that; the. . 

-solicited- r ”fppfri, . company- 
■executlvesVin 1973 went; to thehcouncilman' ' 
‘ : ^ayiqg^'Gandy as" a . thistee "to- bej 

^Sgrrault said he collected 

'and "$1,000- from vlO to; 20 Beireihployes'/ 
' including'; ‘personal money.^qm^^la^?^ 
: execufi ves. •'*;£ ■ ; i p- * ’ • •* * ' 

■*’ : 'Hg^aid Hlie^ ^prQbaS jy ^ 

• <g 64; r ; e commend a t i o n s', * f or^ L tW j*r| 
i contributions to H , Tarrant COurTtyffrac^ 
'fromdhe 1 firm’s legislative contact(stafffe^K| 
City records show.tGandy contributed^ 

■ $1,000: : to The deselection 'of Mayd^R^|® 
.Stovall; , •••• " 

v :Serrault’s statements came after<JadaT' 
Day i s, chief public relations of fj cerj Eor thCni 

^ylogf/Gandy as" a Thistee “to ' be ; company in San . Antonio,.. saidvex^ 
.HigtrVhi'^HThp way he felt it could be use^ ^riften ifmarip •contrihntirins td;ppli ticaUraces aj 
^ibest&&M£# , “ . 1 v > v,> > outside theihhome areas. ; 

Sijrh ‘ rnnfrihnfinns go : Tl 

public, affaiyslpepple 
distribution tbjhe'campai^ 

* Bell . has.' denied that ! lj^'xr^^ii^^ 
political slush fund; in ; Texas 
, The disclosures ‘came af tlle"9ieel2?of^ 
filing of a $29 million libel and def&atiorf' 
suit by dismissed San Antonio ‘Etej l^&x-^ 
: ec u t i ve. J a mes Ash ie y and the f amiiySf :tfe^ 
•late T. O; Gravitf. 

‘ Grayitt was Bellas managef^orbTexasJ 
but committed suiddejOcfc 17 'abhisBallSs-r 
home' /His* family and their la\\yers7s® ( 

Gravitt left several notesryn ;; wScfi^hef’ 
r eferred to aileged political, flin gs set^fjD-b vV 
Bell and unlawful rate-setting practices^?* 


(Indicate page, name of 
newspaper, city and state.) 





Date: 12 - 6-74 







Class! fication: 

Submitting Office:3AN ANTONIO 

j | Being Investigated 

(Mount Clipping in Space Below) 

Lt. Gov. 

i y ^ s * ’’'Senate 

p^le^ongjCqgwill ^make/; use 
^olPa^^i^tmMcs^xpei^ -'who 
’fpund^wiretap omthe phone 
^'p^th^^o ice-3Qhief .. 


|B-Ga^i^5^iman : of *the 
^Senate'i Subcomm j ttee : on Con- 
;Sumer^VAffairsfv conferred 

|Xuesdaywith"J::L. Patterson. 

* * •*•* ■ 
^^atterson/^the electronics 
‘will ^certainty play > 
utite ” v by„ 

f*jCl o wer^ bpo 1 m' m i t tee ; ‘ 1 

jiflo^b^ cal led 

HFat^ra6n;^'4?ycsry technically 
|c8TO^B^ , P^^n , - ,} ; and said 
|h&Jhri i gh ty be' Jhired . as a part - 

time c onsultant to the also discoverefe the ' privat e 

.•subcommittee,. - line of,: HousCm^s^A^ . 

Hobby also said he’ had the Ca rdi ^Vance^fe^ 
^Department joi Public. Safety ' - ‘ well*a&the^ 
examine his. telephones for . assi slants . 

wiretaps twice since he took Lynnhadsai^ 
office in January 1973, was convin^^tKat* : * .somei 
.^taps were'found. “;f 5 Hdustqn;pqlici^ 

* . ;;He^aid4Hat 'as qpiiblit offi^ ^ ' ill ejga! 
ciali^he conducted h is . He said hp^^^lltiiig^ouf 

telephone ^conversations with sophisticated^^ 

the assumption that vhis’ lines . require ‘•'the;V;hdlp^ofHSduth^ 
just, might be tapped. . , . . . western Bell employes; 

* ‘I -ve .never.had any specific Neither Hobby^n^lClower 
reason^; , Vvto^ dhink . so^I 'ye , , would say ^ Ve^actl y • , ; what; 
always :kind * of assumed it; V , Patterson, told 
H obby’sa id i nan i nterview . “He justcameby% 

. Pa tterson. r.was ;hired.. . to ... . the r picture of fwhat 
check the . telephones of is gqingoiwacti^ 

Houston t P plir.e nhjg f Carrol the . countrv^;no ^iust virT 
M. :Lynn. He. found a tap, and . Texas, ” Hobbydaicl. Detailsof 

what ; 

come -out m the^u i^li^ne ? 

• subcommittee’.ipl^Jg^^p; 

There are all^ation^tet*: 
certainty givevorie^^. fo^ 
great concern ; ’’^Hobbysaid^ 

mi ttee, w h i'^l^r ec ed ; 

Hobby’s author^ 
week for an investigation^ of] 
Bell, was about|t6‘ienter>-^a : 
period of background' :wdrk{$ 
leading up to jubii^hea)^ 

met, he said, to deveipp plans: 
and make ; deci stoiriB. what 
kind of staff m ightlbe. needed^., 
.While;. Patte^if;^ 

Clower sa idjl^ikei b^kipd out J 
my phone s, and : ^tey^are!fred; ■ 

(Indicate page, name of 
newspaper, cily and state.) 

PAGE 19 A 




Date: 12-11-74 

Edition: CITY 







Submitting Office: SAN ANTONIO 

r | Being Investigated 

federal grand jury is expected 
to, hear from several 
Southwestern Bell Telephone 
Co. security agents today in a 
camtnnm? probe into alleged; 

. v ^ ■ rr^rrrTT^^ ■ 

illegal 31 'uiirvt: 

enforcement officer^n 

. , The. security. agents anda , 
v formeK^police 4 - officer^feye , 
before : agrandjury^ 

. alre,ady heard testimony;from 
others (inV connection .$w$th 
wiretapping. . > f : . • ,‘f . 

Houstpn Police Chief Ca|j»! 
M. Lynn said earlier thi.S y^r 
that the' grand jury was, fin- 
vestigating .wiretapping* a 
small number of j Housjtpn 
police officers.. : ,^ ; v 

Sources said last week that 
Lynn taped conversations be- 
tween himself, and some police, 
officials and that.this iiifonrtar 
tion iias been presented tojfie 
| grand jury. . 1 

Lynn has charged thaL^be 
illegal ; wiretapping; occur^d 
with the help of telephone 

"Bell Te lephone C o. official s 
havb; denied that ”.an^ 
employes have engaged ,m 
illegal. wiretaps. . 

On Tuesday, one of theTJell 
securityjagents admitted 'that 
; Bell has a room equipped’.to 
mpnitor any telephone 
conversation within 
^Houston phone district. 

: |Tim Russell, the agent, gave 
^newsmen a tour of the srhail 
room Sand showed the ^uijp- 
' (menrwhich he said securj|y 
' agents use to investigate tele- 
phone fraud or abuse. 

'^jSome Bell officials earlier. 
ifhO ttUllUfO that suSTTT^h 
^existed. But Russell said it has 
been in use for several year|^,- 

“There’s nothing secret 
about the room at 
said.^ _ '• 

Bell is enpowered by law to, 
monitor , or wiretap, telephone 
. conversations when there^fe*’ 
readon. v to suspect J the, 
telephone company is bemg 

Equipment in the room/said ( 
Russeliy can be plugged into a 
selected line anywhere inTBe 
‘city by making a connection at 
anoutlying switching statio^ 
’f-ivOnce': the connectiomfSs 
iniade; he said, the niacMe; 
:records. on ; paper: tape^;the 
numbers called, the duration 
af pAcK ca ll, the d ate and the 
''.'time:-' "'; ,J ' ; 




Date: 12-11-74 

Edition: CITY 






Classification : 

Submitting Office: SAN ANTONI C 

| j Being Investigated 

' * i 

Fit®— Serial Charge Out 

FD-5 (Rev. d- 17-70) 

0*8—16—83475-1 OPO 





Class. Case No. Lost Serial 

1 1 Pending Q Closed 

Serial No* Description of Seriol 







o £ 
'£ O 







Date Charged 



0-9 (Rev. 2-14-74) 


Transmit in Via Airte 1 

(Type in plaintext or code) 


,To: SAC, San Antonio (56-NEW) 


Director, FBI 



UNSUBS; . . /s y <r 




I b6 















ReSAairtel 12/4/74. 

This matter discussed with Criminal Section of 
the Department of Justice, and Department advised no inves- 
tigation should be instituted at this time. 

1 - Dallas 

(Do not type below this line.) 

(Do not type BEYOND THIS MARGIN.) 

The President of Soulhwes-j 
tern Bell Telephone wil \h 
discuss charges and allega- 
tions against the company, 
Thursday here. 

! Zane E. Barnes, South- 
western Bell’s chief execu- 
tive, will talk at a noon lun- 
cheon of the San Antonio 
Kiwanis Club in the Anaca- 
cho Room of the St. Anthony 
Hotel. * ...*i 

Barnes, SI. Louis, Moi-Ji 
has been president of the? 
communications company, 
for more than a year. 

• « ■*' 

(Indicate page, name of 
newspaper, city and state.) 





Date: 12— 14“74 
Edition. :H OME 







Submitting Offic eSAN ANTONIO 

1 | Being Investigated 

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in Space Be!ow) 

G9A FPMR <♦! CF«) 101*11.0 







*• •** 

date: 1/3/75 

■ .v/'V * 

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r * -a-, 

■ ;* r; ' 

/ * * / 

. '■ / ■ 

/ ' 




* * 

. * « 4 / \ \ . ' 

•* . • •• 

b6 1 

Re Kansas City letter to New Orleans, 12/13/74. 

Enclosed herewith for Houston is one copy of 
Kansas City letter to New Orleans, referenced above. V.. ii, 

For the information of New Orleans and receiving 
offices, information was received on or about 10/17/74 that a 
Mr. T. O. GRAVITT, Vice-President, Southwestern Bell Telephone 
Company, Dallas, and former general manager of the San Antonio 
operation of Southwestern Bell Telephone Company, committed 
suicide at Dallas. Shortly thereafter information was received ^ 
through p ublic news media that| p 


Southwestern Bell Telephone Company, San Antonio, 
was discharged by Southwestern Bell for falsification of 
expense Vouchers, As this information has maintained "front . 
page billing" in the news media for several months, San Antonio 
has directed appropriate communication to the Bureau under the 
caption of "UNSUBS, Southwestern Bell’ Cmimanvt t o. 

GRAVITT, former Vice-President (Deceased);] | 

San Antonio, Texas, Eli." 

Southwestern Bell Telephone Cc^pany, 

On 12/12/74, the Bureau advised this 
matter was discussed with the Criminal Section of the U. S. 
Department of Justice and the Department advised no investigation 
should be instituted at this time. Additionally, it should be noted 

2-New Orleans 
1-Dallas (Info) 

1-Houston (Enc. 1) (Info) 
1-Kansas City (92-1751) (Info) 
4 -San Antonfo 

t 165-575) 



(9) QJW- 

Searched. — 

Serialized......^ .... 

Indexed..... ' 

Filed ....... ../{Gw. . .. • 

SA 92-94 



*■ . ' * • , ■ V * * *■ ’ -♦ ■, _ ■3?/ '• , 

* *. ' • 1 **'* ** , ^ •' ’■ 

** • ■* * V.-' : . * ' • 

* , y • V.-;. ;,y iV**-. ’ . * 

-'Sxw . 

that the family of GRAVTTT have filed a $29.2 

million damage suit against Southwestern Bell Telephone 
Company in November, 1974. Charges and counter-charges 
have been made by both sides and as noted, this matter has 
gathered widespread newspaper publicity. V-.?;-' ■ ■ 

p- - ■ ■• ■ ■■ ~ * ' - * ' '•*« : ' *•« 

Through contacts with 

I general information has bpen_ received, con- 

cerning alleged irregularities conducted by i |and through 

an analysis of this material, it appears Southwestern Bell 
Telephone Company at the present time may be, either offi cially, 
or unofficially, trying to bring about an investigation of I 
by law enforcement authorities so as to "take the heat off their 
back." •• - .I'.,' • / '.V . 

Based upon information received from a security 
represen tative at Southwestern Bell in San Antonio, a case 
entitled \ ~~~ ~1 was opened in an effort 

to determine if his alleged bookmaking activity was violating 
Federal statute under the investigative jurisdiction of this 
agency . Subsequently, information was received that I I 

| I residing in the Austin, Texas, area, was bookmaking out 

of the Blue or Gold Gardenia Lounge in that city. This 
informat ion was again received through [" 

In summation, it appears information furnished to 
Kansas City in referenced letter may have been "leaked" 
out of Southwestern Bell Telephone Company in an effort 
to bring about a relaxation in pressure being placed on that 
company by| |and his $29.2 million suit. 

San Antonio, nowever, is aisseminating the information. in 
referenced communication to appropriate cas e files, includi ng 
the file containing active investigation on! ~1 

OO: SAN ANTONIO, San Antonio file: 165-575. -ad d i tionally, 
information is being disseminated to San Antonio file entitled. 

Texas, RICO, San Antonio file: 183-11, as this information 
may be pertinent concerning any possible land fraud schemes 
linderway in that area. 

SA 92-94 

As information in enclosed letter makes reference 
to alleged land fraud schemes in the Corpus Christ!# 

Texas# area# a copy of this letter and enclosure is being furnished 
to Houston Division for whatever assistance it may provide. 




47 .- 44 ''* ^ " ' 


00: New Orleans I lo(r~ . 

/ 1 **' ^ 


Re Kansas City telephone call to New Orleans, 

The following Is being furnished to Receiving 
Offices for information purposes: . .... .. .. 

A confidential source of the Kansas Cip 
Led information during September. 1974 that! 

| who at that time was 

Southwestern Bell Tel ephone ( 

Texas, was a reported l Z 

ed that! 





was developed, although not confirmed, that| land officers 

of Frost National Bank, San Antonio, Texas, and CARLOS MARCELLO 
were possibly involved in a land fraud scheme in Corpus Christ! , 
Texas, within the past three years. Source could furnish no 
further info rmation concerning this. Source was also of the 
opinion that either knows or is friendly with MARCELLO 

and/or members of the New Orleans '"Outfit", probably through 
I ™~~ Icareer. . 

He further stated that is a close friend 

of the Vice President and Gene ral Manager of SWBTC in Dallas, 

2 - New Orleans 
1 - Balias (Info) 

San Antonio (Info) 
I 1 - Kansas City 

^ SLMrU*/H.;. ww ; ; f/ * \ 

. DEC i e 1374 

Vr'j. . y* • v 
' 4->»* V- r ' ■ 
/’} ' ’ 

’■ '^b 7 D ■:■ 

KC 92-1751 

l r .. 

by SWBTC in Kansas at one time and after GRAVITT was 
promoted and transferre d to Dal las. Texas, GRAVITT was 

transfer red and promoted 

instrumental in getting 
to his present position 

The Strike Force, Kansas City, Missouri, issued 
a subpoena to Quick Print of Wichita, Kansas, requesting all 
original checks or other records of payments to T. 0, GRAVITTS, 

or CARLOS MARCELLO to determine if in fact 

MARCELl.0 could possibly have an interest in Quick Print, 

] Wichita, 

Kansas, directed a letter to 
Wichita, Kansas, stating that 

U. S. Attorney ROBERT J. 
after going through all company records he did not find any 
record indicating payments to GRAVITTS, 


Source stated he later learned that there was an 
investigation being conducted by SWBTC in Dallas, Texas, and 
San Antonio, Texas, regarding irregularities whioh were * 
possibly occurring at SWBTC. Source Ba id there were indi- 

cations that T. 0. 




were possibly involved. 

For information of San Antoni o . source subsequently 
stated he had learned that 



KC 92-1751 

The above inform ation regarding 

” — |£ s jj e £ n g furnished the San Antonio 

Division for whatever action San Antonio desires to take. If 
investigation is conduted by San Antonio regarding this 
they should be very circumspect so a8 not to disclose the 

Inasmuch as no furtheranvestigation is to be 
conducted by the Kansas City Division, this case is considered 


. V 

In Reply , Please Refer to 
File No . 

• , * 


Charlotte, North Carolina 
January 15, 1975 


The following articles appeared in the January 15, 
1975, edition of the- Charlotte Observer , a daily morning 







Observer Staff Writers 
Copyright 1975/ The Cha/totte Observer 

The man who directed Southern 
Bell Telephone Co.’s. North Carolina 
operation for nearly nine years says 
he administered what he calls an 
illegal, political 'blush fund to chan- 
nel company donations secretly to 
candidates in. both political parties. 

The' former executive, John J. 
Ryan, 55, was one of Charlotte’s 
most prestigious business and civic' 
leaders until his sudden fall from 
his $64,000-a-year job in July 1973. 
He was president of the Charlotte 
Chamber of Commerce in 1972. . 

r?" J 1 . ""!*> 

. IN A SERIES, of interviews with 
The Observer during the past three- 
weeks, Ryan contended that he was 
fired from, Southern Bell, at least 
partly for his strenuous political ac- 
tivities on behalf of the company. 

But Ryan insisted that his politi- 
cal fund raising, was clearly part of 
his company duties as defined by 
his Southern Bell superiors in At- 
lanta. , * • 

There was never any question in 
his mind from “the first day we 
ever did it,” Ryan asserted, that he 
and . Southern Bell were violating 
the law. Both state and federal laws 
forbid corporate political contribu- 
tions. W* 

. “It’s sort of like jaywalking,” Ryan 
explained. , “I . mean, you know it’s 

66 When you’re in a big com- 
pany . • . the stream of cam- 
paign managers and candi- 

cannot comment on allegations by 
Mr. Ryan concerning any cfe his ac- 
tivities while in the company's em- 
ploy, or the circumstances surround- 
ing his department.” N ^ • ' ■ / 

dates who come by for help is 
endless. See, everybody thinks, 
‘Bell’s big. They have plenty 
of money. Go down and ask 
them for some.’ ” 

— John J\ Ryan 

wrong, but it became a way, of life. 
The campaigns came and went, and 
you gotta pay ’em something, and if 
I had a. better' way of doing it, I 
would have suggested it to them. I 
didn’t like it.” « 

Ryan said the political fund was 
fueled by payments from himself 
and eight of liis top executives. 
They were given pay raises, he said, 
with the clear understanding that 
part of the money was to be kicked 
back to the political fund. Maximum 
individual payments to the fund by 
his subordinates were $100 a month, . 
Ryan added. * „ V 

IN A BRIEF prepared statement 
issued Tuesday through' B,. Franklin 
Skinner, Ryan’s successor in Char- 
lotte, Southern Bell declined com- 
ment on all of Ryan’s allegations. 

The statement said, that, because 
Ryan-, has' tolcl the company he in- 
tends to sue Southern Bell, the com- 
pany on advice of counsel “simply 

Unofficial sources inside th<k com- 
pany’s North Carolina headquarters 
on the 21st floor of the Jefferson- 
First Union Tower in downtown. 
Charlotte suggest that' Ryant was 
fired after his superiors in Atlanta 
were taken aback when they discov- 
ered the far-reaching dimensions of 
his political fund-raising activity. 

It was corporate concern about* 
-some of his political work, these 
- sources say, that led to his ouster as 
.vice president and general manager 
for- Southern Bell’s 12,000-eniploye 
North Carolina system. 

Ryan said about $10,000 was paid 
* into the political fund annually; 
However, unofficial sources inside 
Southern Bell’s Charlotte headquar- 
ters said the fund contained as 
much as $85,000 a year. Ryan de- 
nies this. 

Ryan, who worked for Bell for 27 [ 
years after beginning as a commer- 
cial sales representative in Miami, 
says he was abruptly fired from his 
$64,000-a-year job in *1973 after top 
company officials conducted what 
he called an “un-American” investi- 
gation of him! 

At the tim^r y July 16, 1973 — 
the company said publicly that Ryan 
had * voluntarily elected to retire 
after the company said it wanted to. 


transfer' him to Atlanta. Ryan' ex*' -He’d just' say,, ‘John/ we’re going “ijft got' 'money * from” John 4 Ryan ’and 
plained at the time that he and his to give Larry an 8 per cent (raise) wevrepoHed it from John Rvan because 
family, frona-^hw?;, he is now sepa- with ; a 2 per eent^ increment (kick-- that’s *.vvhere it Where John 

rated, did 'not want to leave Char- backhand he will^^a $50-a-month Ry iV n -got it from,* only John Ryan 
lotte, . ' . man,;’ Ilyan said, ' • . . knows/' Why it was in cash, T don't 

.. . - t * , Contacted- Tuesday night. Johnson know,- 1 Smith said. 

In its Tuesday ~ statement, howev- >aid;,,“He makes a lot of allegations', sen/ Jesse Helms's 1972 campaign 
the company said Ryan “was rc- but -irrespective of this, I’m confined manager, Tom Ellis of Raleigh, said he 
lieved of his duties ... because, the. to -the- comoanv comment just as n otp recall any specific contributions 

top management of Southern Beil SkhVher is.” ' 

felt that the time had come to . . . 

change the general management of IN c HIS INTERVIEWS' with The 
Southern Bellks operation in North Observer, Ryan said he directed Galifianakis and his campaign manag- 
Carolina.” , contributions totaling $38,000 to or, businessman Russell Walker of Ashe- 

North Carolina political candidates boro, said they/ did not recall receiving 
The statement said Ryan was for-. governor — all four major can- contributions from. Southern Bell offk 
transferred to the company’s Allan-, dictated — Plus senator and con- dais/*" 

from --Ryan but a $1,000 contribution was 
listed ‘fin Helms’s campaign finance re- 
ports. ■ 

ta hea dquar ters for his final month 
with the company with the under- 
standing that he would retire. That 

gressman during 1972. ■ Ryap said the, political fund still owed 

Ryan 1 contends the contributions; him- the- $18, 000 when he was fired. He* 
all .made in cash, came from $28,000 saiddie'never got it back, 
decision, -the company • said., was in/personal loans Ryan* had at Char- Tn Tils’ interviews with The Observer* 
“also by mutual agreement and , for jottc.*.. banks — he expected to get Ryan; 1 - maintained that Southern Bell's 
MrTRyan’s persona) benefit.”. The ’hismiioney back later from the polit- practice 'of political donations goes back 
company would not elaborate. j C al fu'nd — and $10,000 from the* to^al, least • 1962. He says it was op; 

• * in. ' political fund itself. ‘ crated here with the full knowledge of 

RYAN EMPHASIZED that othei Vpj/g breakdown he says, was: Southern,- Bell's top executives at the At- 
coipoiate executives in Chai lotte. do now* Gov. Jim Holshouser, lanta 1 headquarters, who, he says, deter- 

whom 'he did not name, have served } ’ 

the" same illegal political fund-rais- 
ing '''"functions for their companies 

$10,000 to H. Pat Taylor, $10,000 to mined how much each of the Bell execu- 
Hargrave “Skipper” Bowles, at least dyes involved had to 1 contribute to the 

f c , +l $2,000 " to now-U. S.. Sen. Jesse fund.-^*; ' : - 

that he says he did for Southern ~ r i: ' “• '“ ,r • - * 

_ i! i ri6iino 'ouu uic a cj.utuuj.Iig ui- f • 

t ■ vid’dd'^’mong now-Lt. Gov. Jim Hunt; \RYANf ALSO contends that the eompa- 
He.idescribed them as “well-inten- now - 9th’ District Rep. Jim Martin, ny.. tapped his telephones to gather por- 
tioned, moral men who were victim* unsuccessful Democratic senatorial sq^ ^information that was used in mak* 
ized, as I was, by a system that is candidate Nick Galifianakis of Dur- ing the decision that he should be fired, 
ess, ghttally corrupt.” ' , |ham and other candidates. :Hyan,.says he plans to sue Southern 

Asked .Tuesday what reaction lie 1 Holshouser aide Gene Anderson * * or $12^ million because they never 

exDected when his former business Tuesday denied receiving any contri- a» owe « lllnl . t0 defend himself during* 
expected «nen. Jus. ioimei business Southern a Bell ; Taylor company. mvest.gation that led to his 

and/, political associates in Charlotte 

firing. He says the suit also is an at- 

read- his story, Ryan repiiedi * fm m rcpotati.n, * 

“Tomorrow morning at 10 o’clock, sure/whether he received a donation f a ‘ vs h f s been damaged because of the 

they’re going to stop what they’re f r0 nV Rvan. Martin confirmed that • ! nu : circumstances surrounding his 

doing: A lot of bankers are going to his 1972' campaign received a contri- clepamire from SouL| iern'Bell.. 
be gulping aspirin,” . bution from Ryan. Galifianakis and He -says he has documentary support 

• Ryan said he decided 'to go public his campaign manager said' they for ‘ ilis charges, which he says he will 

with his case because of “an over- rcoiUd’iiot recall a contribution. make public, when his lawsuit is heard 

whelming; .deep obligation to clear 
my name. I sincerely hope all peo- 
ple will understand the importance 
,of .my telling my story, wjiich has 
never been heard.” 

BOWLES SAID Tuesday neither he nor 
his- two- key fund raisers knew of any 
contribution from Ryan. Hunt said, “To 

in' court. 

ASKED BY The, Observer for docu- 
, - _ . _ mentary evidence to support his conten- 

X S2** Jota R, “ nev " «“ lion,, n. offered . Z, or L»Cu 
.aid b. «M not involved in kltos ,rom H«mI “ndidaios. .late- 

RYAN SAID the * 

money, each Charlotte executive e d ,r -a contribution of that size" was 
would receive in raises and how ma de_. A source deeply involved in Tay- 
roucli he would kick back to tlie po- lor.’s campaign confirmed, however, that 
litical fund were decided in Atlanta R yan contributed at least $5,000 to the 
by N. R. Johnson, who is Southern Taylor.campaign. 

of fund raising for bis campaign bni donbi- STJffSX C 

from well-known political fund raisers.- 
While the material clearly suggests 
that Ryan was’ deeply involved in politi- 
cal campaigns in 1972, none of what 

Bell’s vice president for personnel. Ninth 'District Rep. Jim Martin’s 1972 R > f an -provided The Observer proves in 
Ryan saidjlnligsojo • would tell him campaign treasur er, C harlotte lawyer j ?” y clcar ; cut wa - v th f existence of cor- 
whenever he would give a kickback Zatfi;, Smith, said lie remembered. receiv-j , , a 6 ^'blbutions by Soutiiern 

raise, -..Which was given separately ing/'flyap’s $400 cash contribution in an! . ' 

from'ai normal raise. -....Hi-iL''* - . I • 

» envelope.. 

t Last. Sept. 25, Ryan filed a' complaint 

against Southern ‘Bell with the U.’ S. j Ryan says he .remained 'silent for .(he 

Equal Employment Commission, charg- 
ing, that (h e comnau v fired him for his 
attempts to eliminate discriminatory hir- 
ing and promoting practices involving 
womc n w it hi n th e com pany . 

. Several of Ryan's charges have been 
confirmed by other sources. ‘However, anr ^ general manager of Texas opera- 

past 17 months because he was afraid 
he could not win . a laws in t against the 
nation’s largest corporation — AT&T, 
which is Southern Belt’s parent compa- 

Then, last Oct. 17, the vice president] 

segments of his story are so far unsub- 
stantiated. 1 

The existence of the political slush 
fund was confirmed Tuesday by retired 
Southern Bell assistant vice president 
John Cooper and an anonymous source 

•Ryan said his personal knowledge * of 
the political fund system goes back to 
19(>2 when he ' w ^s s tation ed in Atlanta- 
with the Georgia operation of Southern 
Ben. . ; 

He said: “The way they did the thing • 
is they make adjustments to pay ( rais- 
es) — 'for the "taxes or lax bracket the 
person is in — and they’re all in the 
same bracket practically, you. know, and 

lions for Southwestern Bell in Dallas 
committed suicide and left memoranda * 

and letters charging the'' company* wirii they, adjust the pa/, with the- idea that 
hounding him to his death as the result the person will put this money back’ into 
of a secret internal investigation. the political pool to be used for candi- 

UPON READING about ■ the Texas dates ' oil a »eed basis, to stay bitched to* 
within the company. Ryan's ouster from case in the Charlotte newspapers, Ryan 1 ie P^ieaL, thing, 
his Charlotte job is confirmed by South- ,said he became convinced his case was- "ft was a systemwide thing, *11 was. 

,ern Bell, 


" UNSUBSTANTIATED, however, is his 
explanation for how the political slush 
.fupd was fed. - 

Ryan, a ruddy native^ New Yorker who 
is 6, feet 2^ inches tall and weighs 175 i character assassination. 

similar to the one involving the dead completely controlled in the corporate 
Texas* executive and one of his associ- headquarters 

ates, who was fired. The dead man’s ASKED IF HE thought that any of 
widow and two sons and the fired execu- .these political contributions were illegal,' 
tive have filed a $29.2-million lawsuit Ryan replied, “It was a deliberate at- 
against Southwestern' Bell, charging 

tempt by ’a large corporation to circum- 
vent the election laws.” 

pounds, ^ was one of Charlotte's most 
prominent and powerful civic leaders 
when his sudden retirement came. 

He was the 1972 president of the Char- 
lotte Chamber of Commerce, chairman of 
'the United Way in 1968 and was presi- 
dent of Carolinas International Tennis 

Foundation at' the time, of his. forced re- iom , olrtl) n n v »n coiri n 

tiremenl. He also was - a .member of ihe J e ' 1T ' 0 ^‘ t0 ' a's'-The'bo'x;-” " r “ 

board of directors of First Union Nation- . .. 

, Cooper, who now lives in 

v i5anK ‘ . ■ • Beach, Fla!, said Tuesday night in a time. Some candidate or ' some .cam- 

telephone interview that he knew of the P ai 5 n manager or somebody with a ref- 

• Ryan said ^ John Cooper, -.a retired 
Southern Bell assistant vice president for 
public relations and public affairs, kept 
the fund for a time in cash in his desk 
drawer. After Cooper retired in 1971 
•Ryan said, he kept the fund himself.* 
Although the money was kept in an 

He claimed* that he “pleaded over the 
years that it was illegal aiid unethical — 
only because it disturbed the hell out of 
me that certain participants got big ad- 
justments in pay and contributed noth- 
! ing. • ' . . * 

'I never wanted anything to do with 

}-) (K/-, Hri ev 

m.a *> I.,, -v 

* T sistecl. “It’s an ugly, nasyy, ' hopeless. 
Ormond task, because somebody's -upset all the 

;He now lives on his Southern Bell re- 
tirement and other income, which he 
says totals $26,000 a year. Since 

existence of a political fund “that some erendum or something. They've got 
of the (department heads) contributed more demands for -money than you can 
„ , , . , . .. c '' to” but said he did not know if Southern .even think of. It’s an ugly, system.” 

) eP em er i ie ia ^ ^or’in^ par 3 e |j_ money was involved. ' ■ Asked if he felt he personally was act- 

bme as a consuRan or Management . ‘ ... ing . illegally by administering the fund." 

Analysts, Inc., a Charlotte firm that con- Tr _ .. , . , . . r T t , , ; 

/ ’ . .. HE DENIED that he was involved m Ryan replied, It- got to-be a way of 

tracts to analyze a company s operations ^ ... . . ... , . 

(he fund in any way although he said he life, you know. 

knew four or five other executives who “Of course, I was borrowing the 
contributed to it. v money all the time, which made me 

The Southern Bell executives who were vev y uncomfortable, because, in all the 
contributing to the fund did not know ^ me f lived in North Carolina, I aver- 
which candidates would receive contribu- a S £ cl betweea-S500 and $600 (a month) of 
tions, Ryan- maintained. my Personal money ended up in a politi- 

Asked who made the decisions on how cal game. Of course, the (bank) notes 

HIS DETAILED allegations represent to use the funds, Ryan replied, ‘T are, personal. They're not company 

a bombshell -in Charlotte and North Car- would - We!1 - no - I would make most of notes. And it would be just an endless 

and suggests ways to cut costs and im-, 
prove efficiency. 

• An orphan at the age of' 9, Ryan grad- 
uated from Manhattan College in 1942, 
'served in the U..S* Navy during World 

* War II as a lieutenant commander and 
joined Southern Bell in 1947. 

.olina politics.' ■ ? 

For years,, big corporations in North 
Carolina, as elsewhere, have been 
’rumored to routinely funnel large 

them, ’but the political advisers (John) treadmill ; — even the off-year, .it's a 
Cooper, (Charles) McCuislon and now problem. When you don’t have a gover 
Bryan Houck also had a voice in the nor’s race, some senator’s running for 

„ , , , . , .. . . Ryan said that for’ years Cooper, a 

amounts of unreported cash into political Soulhom Bel , excculive who has now re 

candidates ' campaign chests. Corporate ' lired k ept tiie cash in an' envelope in' be,ng l 'f d f Jeast from 1964 on, he be- 
political contributions violate both feder- hjs • desk . drawer . T1)cn Ryan himself 1,eveat 'V gubernatorial., campaign 

kent it for awhile, he said, in his office " d a J.u'mhjr of candidates 


ALTHOUGH RYAN said the fund was: 

al and state laws. 
But those rumors 

have never been 

on the 21st floor of the Jefferson-First 

verified and t here is n o precedent i« Un i 0 n Tower in downtown Charlotte. . 

North Carolina un^nwttjbr corporate ex- ^ J ^ r , 

ccutivc participating in such activity and * B ^TH McCUiSlON and Houck deny 
then publicly disclosing the details. \ . knowledge of any company political 

fund., . \ 

was the key year when the fund' appar- 
ently got Ryan in trouble with his stipe- 

riorsand eventually helped lead to his “T' ,e m °st I could say i$ tha f< from 
firing. .the clay I got to North Carolina until the 

'The 1072 campalgJT was important be- day * the^anii);iav, the fund was in 
cause Ryan said he had been told by his ,dc ^ always, Ryan said. We never 
Unri \ horn n^d a cosh _flow. 1 lioy ncvci clid any* 

superiors he had to improve Southern ,iia . u a , tjU > n - uuw * ^hey 
Beil’s position on telephone rate-incrcasel 1 nn ® ng R was aR ™ ys * n deb *‘ 
requests before the N.C. Utilities Com- 
mission. Whoever became the new gov- 
ernor would be choosing two members| 
of the five- member commission 
eight-year terms. f ■* . » 

Ryan said, “In the early part of ’72 in 

Greensboro, if was probably in March or Southern -Bell was fiist contacted last top officials 

According to Ryan, the men* told him 
they were in Charlotte to conduct an in- 
vestigation. He _said the y asked him to 
“excuse'' himself from his office area 
while they questioned his subordinates. 

I had a 3 o’clock appointment with, 
the attorney general, Robert Morgan — 
the next morning a 10 o’clock appoint- 
ment with Gov. Jim HolsliQUScr — to ac- 

The Observer first approached Ryan 
three weeks ago after hearing reports of j 
the existence of the political fund and of , 

for lRyan s * ur J 101e d thing. Ryan con firmed »q Ua j n |. Diem with Bell’s latest filing for 
i ropoils and began telling his story, a ra ^ e increase of $34 million/’ Ryan re- 
in detail. "* — ‘ , /called of the conversation with Ihe three 

Rast, Travis and N. R, 

April, my president, (L, E.) Rast (presi- 
dent of Southern Bell, and my boss,' (J, 

/[Thursday for an interview. Skinner met Johnson, vice president of personnel, 
with Observer reporters Friday morning ‘‘'And ’Rast quickly said, ‘Well, why 
W.) Travis (vice president in charge of' and Polled’ out he was not here, during don’t you go ahead and just do that? Go* 
operations for Southern Bell), got in aj Ryan ’ s tcnurc and [illus was unal)le on and do that.' And I said, ‘No, you’re 

hotel room in Greensboro, and they real-! answer any <J ue 5tidn s about that period. ~ up here to talk to my -people and you 

ly put it to me for the commission and* v . • want me to be excused.' I m just going 

ihe importance of a good, successful * J AfE FRIDAY, aftei confer ling with to leave right now, I m disgusted. Ill 

rate case and the importance of improv* ^ a P Soutnein Bell olficials in Atlanta by just leave it to you. I said: 

ini relations with Ihe commissioners and telephone, Skinner issued a brief state-jail about?’ And he aid: .’We’ll 

SkT Acre effective h/the ^akhir similar to the one issued Tuesday. [be in touch with, you Friday.’ Then I 
area (They said) that bic things were Tbe statement declined comment on thej (hung up and) walked out." 

JSr USf U»1 . polUicM n»d oper-| ~ ' . '• ' • " 

getting only 50 or 60 per cent of what i ( .ated while Ryan was with the company. RYAN WAS CALLED to Atlanta five 
was asking for and they .thought I ought; In answer to questions Skinner, said he days later, -he said, and told he was 
to have a .better . batting average than was certain that no, political fund backfired, 
that.” . - been- in operation in Southern Bell's 

~ Ryan said that following the three-hour ^°rth Carolina operation since he ar- 
rhecting he knew he was supposed to rived, which was within days after Ryan 
step up his political activities with * thermit in the summer of 1973. • 

gubernatorial candidates to make sure’ The Observer pointed out the serious- . 

lie was friendly with whoever became, ness of Ryan’s charges and_ urged Skin- Iint0 Charlotte and excusing me while 
the new governor. • • 

Ryan said the pressure on him was to 

pick* the winner in the governor’s race , . , . . 

so Southern Bell’s North: Carolina rate. Skinner agreed and flew to Atlanta tumty to be present for the questioning 
requests would receive more favorable, Monday to meet- with the top company or Questmn then* findings, 
attention. • j officials. Observer reporters met again ^ {hey* simply carried out a secret m- 

He said, “J had. almost a burning decli* with Skinner Tuesday morning and were ves tig a ti°n with a bunch of people tern- 
cation to be close to the next governor given Southern Bell’s prepared stale- P* oyes) ^ w ^° are lightened (for their 
— as close as I could get to him, so meat, which said the company, was fol-^ obs ^ ^hey -reached a foregone conclu- 
that I might have .-some access’ to the lowing its lawyers’ advice not to answer s * on and they removed me from the pic- 
com m i s sio n ~ i h a t wbul cl more . ablv get* the questions because of anticipated liti-** ure , ^ abd) did irreparable damage to 
them to hear our story. To be more ef- . gallon by Ryan. me without me ever liaving any sem " 

fective is what I wanted.” - - \ . .. . ' blance of a fair ■ hearing - that’s un- 

Ryan said lie made cash contributions, 
some out of .his own bank account, to' all 

He said: “When -I say t hat South ern 
Bell used un-American tactics in dispos-. 
ing of me, I’m referring to an insidious 
method of- (my. . superiors) coming, ‘from . 
the corporate headquarters in Atlanta 

ner to contact Southern Bell officials ’in’ (they) cross-examined and' interrogated 
Atlanta for a more responsive* comment my subordinates, and got into my person- 
on the charges; • •*. ai life and did not afford me an oppor- 

Ryan conceded it is possible that Skin- American.” 

tJ ner did not know about the political fund Ryan claims that a d jf fei . €nce of po liti- 

■fou/ gubernatorial" candi’datTs^d'unng the * eca “ se Skinn ei' "as brought in to > North cai opinion between two prominent Char- 
1971 camoai«n Irvine in recover a- Carolina from the Chesapeake and Poto-iotte businessmen on the Southern Bell 

Co " head "“ rlm ‘ l 1 *•*>• - C. C. te. 

litical fund.. 

Washington, D.C. 

“HE JTJST may be 

president of Cameron Financial Corp.; 
and Ed OTIerron, president, of Eckerd 
“1 WOULD USUALLY be paying a Illb auo1 may *7 with his back- Drugs Co. — helped undermine the con- 
persona! bank note off with it (the fund) groUnd and and. being a staff man fidence of his superiors ip him. - . 
because, see, even though the money is Rs possible that hr “Mr, Cameron, is — ^ director of 

collected over a long period of time, in a doesn, f t f know anyt,lin o this,” Ryan Southern Bell, was a very strong propo- 
■political campaign things intensified sa * d ’ " R s aIso P° ssible that,, due to thc U ent for Skipper Bowles, -and Mr. O’Her*:' 

prior to the primary and the runoff, .circumstances surrounding my departure 
Then there's a slump, and then they In- frorn the com Pany, that this thing may 

tensity in September again.” . ’ have been ah ut down. I told them to 

Ryan claimed the political slush fund shut it down.” 
was not too v raising the Ryan said he was unaware that he 

huge amount^ of money needed to feed wa s in trouble , wit h w the company until 

:the campaigns of political candidates. 8:30 a.m. June 19, 1973, when three of 

his superiors from Atlanta called from 
the Charlotte airport. * * •• A 

Yon'/ who's also' a director 'of Southern "You’re .going to end up taking one 
’Bell, was a very strong proponent for man's word against another,” Anderson 
LI. Gov. Pat Taylor to be governor, and, said. ,»•* . 

1 must aclmfir 1 - thar -i was going alMnit.; 

lina who were' (previously) subordinates 
of mine; who' transferred their loyalties 
|to , somebody else and who were able to 
just put a cloud TxWTTKP like : ‘We a can't 
tell you why he left the company. We 
were told not to talk about it/ And 

to attempt to maintain the best relations! No 1 SUCH contribution was declared in 
with both of them. M * ^'.' /Ryan’s name by Holshouser. Because the! 

contribution took place after the deadline that’s all you need . . 

of 10 days following the 1972 election,- "Because with a backdrop of. .what 
Holshouser was not required to list tlic Look,; placo,. you can see how clear it is 
alleged contribution under the campaign 1° everybody, that this iellow (himself) 
law in effect , at that time. However, didn’t resign and take early retirement, 
Holshouser voluntarily did issue a list of that something else happened, you see. 

- Ryan was never a member of v$ou th- 
em Bell’s board of directors although ’ be 
did serve, on the board of First Union 
National Bank, a subsidiary of the Cam- 
eron Financial »Corp. He claimed .that 

Cameron and O’lierron were both going 
to Sc/uthern Bell board meetings and de- 

claring that they 
governor of North. Carolina/’ 

post-election contributors, including $500.5° that has, all added up io a very djffi- 
...... . ..each from such prominent Democrats as cu ^ situation for me,” he said. . , 

had locks on the n «M Comeron ancI Luther Hodges Jr., presi-, Ryan hays th e EEOC invesligntion, 

which is secret by lcclcraf law, is contin- 

“BEING IN the utility business 

dent of North Carolina National Bank. 

Following the election and in early 1973, uing 

’a state where the governor appoints /he 
commissioners to the utility commission/ 

Ryan says his superiors at Southern Belli 

my interest in. who wins is obvious/*! 
Ryan said. 

headquarters seemed to change direc- 
tion. , 

’’They said that* I got too involved in 
the governor's race and they were dc- 

, ' . . emphasizing politics . . /' Ryan said. 

- Ryan said the pressure became so in- • . ... . ,, 

• ^ ‘ , , \. . , --‘ft was conflicting: Also, when they. were, 

tense that he continued to pour money- . , . . .... f . 

* , , , . , . * de-emphasizing politics for reasons- that 

mto the gubernatorial campaigns. $28,000 ^ know „ l0 me> in the spriag of 

of his own Personal funds, which he ex, >74 _ atter rd ]eft them six months; 

peeled -to recover later from the compa* ... , , . f. _ • 

1 f t seven months — the boss (John DeBults; 

ny s political fund or be rewarded for, . . , c A . - ^ , 

, / , .. . . -'president of American Telephone and- 

nis efforts with further pay raises. ~ 

1 / : Telegraph Co.) made a speech to the Bell 

— I was faced with the possibility- presidents urging theni to get involved 
of a nepublican winning and two csiruc- _j n politics .. . * . -<• ♦ * 

tors — each heavy on different candi* Ryan said he thought about- the possi-: 
dates -r and to me that's triple pressure oiiity of suing Southern Bell for several j . .. 

on which way do you go.”- -//.'* months; particularly after .the company ‘ ^§1* 

• After the Republican primary runoff in threw a cocktail parly for Skinner, , his V 

which ' Holshouser .knocked out Gardner successor, and Ryan received a -tele-' ^ 

and the . Democratic runoff in which phone call from Atlanta asking him not> 

Bowles knocked out Taylor, Ryan said to attend. . * ' ,r 

he told his bosses in Atlanta that Bowles “That removed ’ any doubt as to what-’ ' 
was going to be the next, governor. ^ took place,” Ryan said. “And I have’ 

'But he continued to contribute to Sols-.I^ed under /he shadow of this /ever 
houser, he -says, because of a fear of’jos- since. . .. • 

‘get' in tight think the time has come for a" civjl 

suit which will bring out the truth. *And* 
for the sake of my family and for . my, 

“SEE, UH, THE RISK of getting* uri-) sons ' 1 have every expectation that Hn* 
hitched in political terms — you would so ^ ar as possible, this wrong will. ■ be. 
lose whatever you had in it if you failed righted by a court of law.” . t 

to back the candidate in the runoff, .and; APTER LEA VING Southern bM 

then he gets the nomination. You ve | September W73 Ryan temp01 . arily en , 

een cisconnece . len ie needed .*>ouj tercel the insurance business in Char-’ 

most, you weren t there Thais. theji- IoUc , Afler six mo „t hs . he quit the. bust, 

lemma of the contributor. ~ , . . „ ess He - has becn unemployed sin ceia S t 

Following Holshotiscr’s stunning victory, summer. 

'over v Bowles, Ryan ^said he made # a Ryan charges in his EEOC .complaint 

•$5,000 cash contribution to the new Re- [hat he has been unable to find another 

publican governor-elect. executive 'position because of the compa- 

Ryan claims he handed (lie cash' to ny’s failure to clear his reputation. ’7\', n ,/ 

Southern Beils Raleigh lobbyist, Bryan He said he. had “several negotiations 

Houck* who delivered it to Holshousers with banks that were progressing ,vci;y 
’campaign aide, Gene Anderson. satisfactorily ... And 1 then, as * we 

Houck denies ever handling any such moved along and got closer to making 
money -.and Andcrson^aid he- would an agreement, I would suddenly * be 'told 
“personally swear” ‘ under oath that he. that they’d . iost interest. And, I -know 

never received any cash contributions that, informally/ poopkP'from the b&nlc 

from Southern Bell. i talked to the Bell people in North Garo- ip 


ihg his job for failing to 
with the next governor.” 

Following .is an edited : 
trajiscript of an interview 
vritl^.jghn Ryan concerning 
his involvement in North Car-: 

0 linn 'politics.' 

rt!f tjA 

Qi j °Did the ’ (Southern Bell) > 
investigation (of you) revolve 
around a political contribu- 
tions (U.your knowledge? 

’ RY‘AN* Yes. Part of it did 
Yes 'Sir. * 

1 ! 

QpDid you contribute to all 

four v; of ;thc 1972 gubernatorial 

• RYAN; Yes. 

_ Q:^ And after the Democrat- 
ic primary, in the runoff, did 
you contribute to both (re- 

.l’i J ~ J ~ ~n 

RYAN:. Yes. Sec. uh, the 
risk of getting unhitched in 
political' ‘terms — you would 
lose whatever you had in it if 
you faded to back the c andi- 
dale in the runoff, and then 
he gets the- nomination. 
You’ve been disconnected. 
When he needed you most you 
weren't there. That’s the di- 
lemma of the . contributor. If 
was just buying .insurance. 
The demand . ' was ' always 
greater than you could do. 
And I used to borrow money 
— you know, go to the bank 
and borrow' some money* — 1 
did that all the time. 

Because, sec like in an elec- 
tion like that, you have a 1 
whole string of candidates j 
going and you — it’s like a| 
racetrack and you’re trying loj 
pick the winning horse, be- 
cause in North Carolina — 
with the governor, making' ap- 
pointments for eight years in i 
the utility commission — you 
just can’t afford to get — end 
up totally alienated from the 
governor’s office. 

a result of a meeting that you anything, you know? They 
had with certain Southern Bell just acted like they knew it 
officials? ' ,all. 

RYAN: Well, yeah. In the 
early part „of ’72 in Greens- 
boro — it was probably in 
March or April — my presi- 

dent, Rast, and my boss, Tra- 

pant didn’t feci right, he 

might get^ the adjustment 

(pay raise l^^ancrtiTen not par-, 
ticipate in the thing. We had 
a lot of that. 

er them (the top executives) 
at all. They’d just go on their 
merry way. There was noth- 
ing said about it. And it was 
very loose, except when the 

There was so much pres- 
sure in that meeting that I 

realized that next month the. 

primaries were starting (and)' Ku t * a ^ er °n* if this indi* 
I’d better get hitched ’in this v «*ual came up for another 
vis, got in a hotel room in political thing. I used bad b * ? . 

Greensboro, and they really, judgment. I should have* RYAN; Oh, that didn t both- 
uh, put it to me for ‘the arni-iPjayed the Bell system game; 
mission and the importance of Sit on my thumbs. Stay out of 
a good successful rate case- trouble. And don’t do any- 

and the importance of improv- tiling. 

ing relations with the cornmis- *. • . . Un . 

sioners and getting more ef- ; Q: Was one of the sources *ot the he 

fective ill the rate-making Jo* these funds what might be ' , , 

area (They said) that big c onstrucd as a political slush 11 15 JS . to 'V th tbe 
died, \inoy bom i \ mb „ n jcal things. Reading about the 

things were coming and they™™ T tUe iaKc ? lf " ilcn an | T case t recognize ail 
were unhappy with my getting executive was given a pay. j d ^ 

only 50 or GO per cent of what ™ lse with the understanding ; lllc ^namarxs. 

I was asking for, and they soihe portion of this ^ 4? 

thought: I ought to have a bet- money would be used for po- The "secret ’inter- 

fpr Hal HjvtnvonrfP than that Iitical contributions? , niHiN * ine seuct mici 

ter baltin* a\ erage tnan tnat. . t>yan< Yp* The answer i«' views, electronic surveillance, 

They thought tone of my RYAN. Tes. Ihe answer >s Storing, Ok stehwmy. 

people was) incompetent. And q : you said that in . the 

I defended him. I always do „ ... . early part of ’72 the pressure 

Sa^^^to rofl hVaN: (It depends on) ‘how you to back the right 

let them move him off the the SenatGi six yearS) right . . . The only way to 

, r . , , f you just can’t afford to be *ct the rates right is to get 
That meeting lasted all j e ft ou ^ i.he commissioners right. I 

ternoon. It was like three The ^ they did the thing knew, too, that (two commis : 
hours. An inordinate amount - s tbcy mabe adjustment to i sioners’) terms were expiring, 

of. pressure was placed on me pay w jt b the j dea that the! That by the time our case got 

to be sure to be overwhelm- ;p erson w £j] put this money .heard, we’d have two commis- 
lngly successful with the num- i.back into the political pool to sioners we’d never heard of. 
bers of (the) rale case. It is; be use d f or candidates on a That’s two big votes. “ 
hard to explain to a stranger; need basis to stay bitched to 

that the Bell system is a; the political tiling. Q; Now, if they (company 

numbers game. - i officials) were looking for 

I don t know what commit- q : Di d you initiate this kind someone to get right with the 
ments they made to AT&T, 0 f arrangement in North Car* : governor, it seemed like you 
but they’re translated then olina? , had picked the r i g h t horse 

into four slates (where South- RYAN: Oh, no. '(Holshouser). 

ern Bell operates), and the 1 

pie has to be all there, or Q: Was it going on in other 
(there's) trouble. Bell Systems? 

They’re both kind of techni 

RYAN: Right. 

Q: You were doing this as 

cal men and they thought that RYAN: Oh, I’m positive it 
I ought to become more Yeah. It was a system, 

nical. Well, I'd been vice thing. It was completely con-' 
president almost eight years trolled in the corporate head- 
then, you know. But I never quarters, except for one bad 
got any efedit for knowing feature about it. If the partici- * 

Qi You never got any com- 
ment from them at all about 


RYAN: Yeah. They said 

that I got too jn yoked in the 
governor’s race" and they were, 
de-emphasizing politics. 


Q: But it seems like that time, in a political* campaign that yon were backing four RYAN: The * political plan?, 
(having supported the winner) tilings intensified, prior to the candidates at once (in (he Oh, sure. It was a going con- 
would be t ojhm; jiqicfit . . , 

.RYAN; YeahT If they had] 
political sense, (but) they 
(said tlicy) were de-emphasiz- 
ing politics. 

Q: But it seems like 
would be to their benefit 
to have you here. 

RYAN: Right 

hands with the 




primary amU^a^jamoff. Then 1972 gubernatorial race), 
there’s a slump and then they, that was niGV^ffinrjust your 

that cern when 1 got here. 

Q; Bnt how did that stick in 
your own mind in ’73, com- 
pared with what they’d told 
you in '*72? 

* RYAN; It was conflicting. 

-Also, when they were de-em- 
phasizing politics for reasons 
that were . not known to me, 
in the spring of ’74 — after 
I’d left , them six months, 
seven months ' — • the boss 
•made a speech to the Beli 
presidents urging them to get 
involved in politics, get in 
there and find out who these 
/political) people are. * 

He made that publicly — ' or 

i ~ - 1 it. „ j: 

b, i/iiC itiOuJu 

ahold of it. See? So there was 
some kind of reversal there in 
directions. Southern Bell 
seemed to be phasing away 
from political involvement. 

They were going to turn inter^ hundred 
nally as an efficient, . quiet,; 
operating thing with accoun- 
tants and engineers getting alt 
the resp^mbl^>, jobs. And 
don’t worry about image and 
all. (Now) that’s all reverted 
to back where they were in 
the beginning. They’re franti- 
cally trying to create public 
image now. 

intensify in September again. 

So it's feast or famine — 
and ‘very few feasts. The 
most I could say is that from 
the' day I got to North Caro- 
lina until the day I left the 
company, the fund was in 
debt — always. 

We never had' a cash flow. 
It was always in debt. Of 
course (laughing), when I 
came in it was broke, you 
know, and, of course, I did 
get involved in helping four 
administrations , settle 

personal preference; If* you 
were just an individual citi- 
zen, you wouldn’t have backed 
lour candidates, for governor. 
Is (his some kind of profes- 
sional corporate connection?, 
RYAN: Well,* that’s right. 

Q; Mr. Skinner said, in re- 
plying for the company, that 
if any such (political) fund 
had operated, it was without 
company knowledge. 

RYAN: Poor Mr. .Skinner. 
He’s just totally uninformed. 

You can’t separate the two,, And he’s probably telling the 
•really. Even though in my ca-jtruth. I-lc just may be — with 

pacity as the chief executiveihis background and .all and 
officer for Bell in North Caro-ibeing .a staff man and all — 
iina, you really know that.ii’s very possible that he 
those four are' going to cncl doesn’t know anything about 
up as one — that one of those this. It’s also possible that, 
some four is going to be governor due to ihe circumstances sui> 
: and your identity with the rounding ,*tiy, departure from 
corporation is inseparable the compaTy, uiav this thing 
Q: These executives who from your identity as an indi-jmay have been shut down. I 

were contributing to this fund,; vicinal, so that they’re looking told them to shut it down. 

did they make 
on who got the 
RYAN: No. 

(he decisions 

Q: Who made the decisions? 
RYAN: I would. Well, no, 1 
would make most of them, that 
but the (Bell state) political you 

at you as the head of Bell 
Telephone for North Carolina, 
and you, as a private citizen, 

If you weren’t a big utility 
or a big company, you’d just 
pick a candidate and hope 
he wins, you know, and 
give him a contribution 

Q: These people who were 
contributing to political funds 
— or funds to the political 
slush fund — first of all, how 
many people were there? 

RYAN: I think there were 
about seven or eight of them. 

Q: Who’d 
the money to? 

: RYAN: Me. 

Q: And what 
with the money? 

they contribute 

advisers, John Cooper, jor you pay for the billboard 
(Charles) McCuiston and now or something or' some adver- 

Bryan. Houck, they’d come up usernent. 

and say, like in their ’72 thing -But, when you’re in a big 
when they were over' there company, I guess it’s only 
with - - - they’d say: “Well, j fair -to say that the stream of 
we gotta give some money.’" campaign managers and can- 
Anci we gave him a couple didates who come by for help 
dollars, you know. ,is endless. See, everybody 
thinks, ‘'Bell’s big. They have 

Q: Do 
that was 

you know 

No. I don’t know. 

would you do 

whether plenty of -money. Go down 
land ask them for some.” 
You’re just ' watching all 
Tour of them (gubernatorial 
Q: These political contribu- candidates), and you’re not 
(ions — in your mind — was going to turn somebody down 
aby of this illegal? and say: “We just can’t g i v & 

RYAN: It was a deliberate you anything.” That’s not in- 
attempt by a large corpora- terpreted as (meaning) you 

tion to circumvent ihe election don’t* -have money. That's in- 
laws. I pleaded ^ over the terpreted as (meaning) you're 
years that it was illegal and an opponent. You’re against 
unethical, only because it dis- him.- -• *- 1 ■ 

turbed the hell out of me that 

certain participants . (cxccu- Q: oki you ever feci that 
tives under Ryan) got big ad- you personally . were doing 
justments in pay and contri- anything illegal? 
buted nothing, . RYAN: It got to be a way 

I never wanted anything to 0 f ]ife t you know. Of course, I 
do with being the bag man on* was borrowing money all the 
the thing. It’s an ugly, nasty, time, which made me uncom- 
: hopeless task because some- foriable. because, in all the 
boclys upset all the time, time I lived in North Caro : 
home candidate or some cam- jj na> I’ve averaged between 
paign manager or somebody §500 and $600 (a month) of 

RYAN: I would save it and 
give it away. I would usually 
be .paying a (personal) bank 
note off wilfrJt Because, see, 
even though the money is col- 
lected over a long period of 

with a referendum or some- 
thing. They got more de- 
mands for money than you 
can even think of. 

l - '- ?) 

Q: In the political contribu- 
tions, is it your understanding 


my personal money ended up 
in the political game. 

Q: Was 
found when 

tlds., .a 

you came 



North Carolina (in 1964)? 

Following— i$ — m edited 

transcript of an interview 
loilk John Ryan concerning 
his e xperie nces as a top 
■Southern Bell executive and 
circumstances surrounding his 
.departure from the company. 

Q: Southern Bell says you 
were relieved of your duties 
as vice president and general 
manager of Southern BcU on 
Aug; i, 1575, "because the top 
management felt that it was 
time for a change. They say 
this was by mutual agree- 
ment. Do you agree? 

RYAN; No. That was a 
forced retirement that was a 
very shocking experience — 
to have .peopie from Atlanta 
to come up to North Carolina 
and for people that I knew . 
and trusted over a long span 
of years to then commence 
secret interrogations with so 
many of my people and to 
probe into political affairs and 
into my personal life and to 
really frighten so many of my 
people into more or less fall- 
ing in line to a foregone com 
elusion that (he Atlanta people 
had reached, which was to 
eliminate’ me. 

I've been deeply hurt by 
some of r pv ton assistants, 
who immediately transferred 

their loyalty to Atlanta. I also 
knew all along that my tele- 
phone lines were being moni- 
tored because of certain leaks 
that could only have come 
from the telephone. I found 
that to be a .very depressing 

Also, the meeting that was 
held — the departure meeting 
'where' I allegedly mutually 
reached an agreement — my 
son had been injured a few 
days before — very severely 

— and was still in critical 
condition in the hospital. 

I had not slept for many 
days, and his mother and I 
were with him constantly. I 
received a telephone call to 
meet with the Bell officials in 
response to a letter that I had 
sent to them that I was defin- 
itely going to ..take them into 
court no matter what it look. 
I was not provided any coun- 
sel to explain my rights. 

I was real upset emotional- 
ly, and I was tremendously 
concerned with my son. To 
find myself literally fired 
from a prestigious company 
by their use of tactics that 
were so un-American and so 
contrary to the image that 
the Bell system likes to have 

— I was just crushed and 1 

have been deeply hurt ever 
since. „ . 

I've been victimized for this 
long period of time by the 
fact that Beil owns , the net- 
work and the amount of gos- 
sip that was spread all over 
North Carolina and even into 
Florida. I have a brother 
who’s with Southern Bell in 
Florida, and he heard weird 
stories about me. 

And, then the fact if . I was 
bonorabl v retired like the rec- 
ord shows, my name or plio ; 
tograph or retirement career 
story never appeared in the 
company magazine at all, and 
the company never held any 
kind of farewell for me after 
27 years. . 

This was interpreted by the 
rank and file within the com- 
pany as an outright dismissal. 
The company also planned a 
cocktail party in Charlotte in 
early August to welcome my 
successor, (B. Frank) Skin- 
ner, to the community. I was 
not invited to that party. - 

I was immediate past presi- 
dent of the Chamber of Com- 
merce and had worked very 
hard to make Charlotte a bet- 
ter place. I served as general 
chairman of the United Ap- 
peal campaign, and I served 
as president of the Carol in as 
International Tennis Founda- 
tion, which built the finest 


. tennis Radium*. in the country 
right here. We hosted the TJ.S. 
Davis Cup matches, for the 
world’s championship, and we 
did a lot of. real good things. 

Skinner - was brought to 
Charlotte to meet the depart- 
ment heads. And I received a 
telephone call from Atlanta to 
■ expressly not be present. That 
removed 'any doubt as io 

,.,U L „ ^ * - -l T I * 

itnov iamjh. fmu a MriYC 

lived’ under the shadow of this 
over since. 

I think the time has come 
for a civil suit which will 
bring out. the truth. And for 
the sake of my family and for 
. my sons, 1 have every expec- 
tation that, insofar as Possi-. 
ble, -this wrong will be righted 
by a court of law. 

Q: Mr. Ryani you men- 

tioned the company used “un- 
American tactics’' to probe 
into your political affairs. 
Would you elaborate on that? 

RYAN; ‘ Yes. When I say 
that Southern Bell used un- 
American tactics in disposing 
of me. I’m referring to an in- 
sidious. method of Cmv superi- 
ors) coming from, the corpo- 
rate headquarters in Atlanta 
into Charlotte and excusing 
me while cross-exa- 

mined and interrogated mv 
•... . . • . . 

subordinates and got into r .m^ 
■personaMife. and did not af- 
ford mc^aiwilTpt)!'! unity ta,be' 
present for the .questioning or 
to .question their finding^:*' 1 " 
They simply carried out aj 
secret investigation will/' '&} 
bunch of people ( employ csj 

hours' — like 10 o'clock'' until loyalties to somebody else 'and' 
about 1, The y onclusion ^fnth^wino were able to j ust -pur a 1 
meeting ai 3 was that JL> as cloud over me Tike: *\Vfc flaW 
through — washed upui^rjtcli you* why he left the i eori^ 

that’s it. And that’s what 
we're going to get into j\(W 
(in the court suit) at last. 
r am convinced that a ,M ibH- 

pany, We were told ' nbl"'to* 
talk about it.’ 1 And thal\$>oalii 
you need. 

Before I left the company^, 

who are frightened. ’They, spiracy existed in Southern! made a tour of all major cil- 
i cached a foregone conclusion Bell with respect to my in CfJJies and outlined the equpl ,cm- 

and they removed mp Tom. forts to employ more wqtpeiV" 1 L ,t - 

the picture (and) did irrcpai** and to see that they were '-ad- 
able damage to me without, vanced in management _ Tjf} 

ployment opportunity, that* the 
women were going to •jgttt'*’ the 1 
promotions, that we’re' going 

me cvet having any sem- conformity with the affirma- to hire a certain percentage 1 
bltincc of a fair hearing; live action agreement tli^t“Tof the minority. My hale.m.all 

was accountable for in North started inctmp.fljiltsly ;*ot , 

.i7 Carolina. MU> “^anonymous stuff. • 

That’s un-American. 

Q: What was your first 
knowledge about the internal 

Q: You s a y th»al (he campa-M 
.ic.A iiy natl refused to rcin | sta(^ ( 
’ T T * o k; :v*y<>u in this (EEOC) „ com- 

RYAN: Oh, I just got a call plaint? (Ryan has filed ’a 
— niy secietaiy did ’.fj’nT' complaint wUh the U.S. j^qual' 

[Employment Opportunity* 

Commission.) Did you make 
the formal application? - '*' J ' & 


RYAN: Yes, I did. T s| }Vyot^ 
a letter to the presidents -pi. 
Southern Bell. And I said: j*lff 
the press release of July^ir 

the airport that (L.E.) ; KaBt 
(president of Southern Bell), 

<J.W.) Travis (vice president 
of operations for Southern 
Bell and Ryan's immediate 
superior) and (N.R.) Johnson 
(vice president of personnel, 
for Southern Bell) were; on. 

the ground in Charlotte, ri ancj t (1973), you announced that* P 
they- re coming right over., had been transferred as'Aa*’ 
Ibis is a Monday morning — v -j ce orcsident, effective’ ''Aug;* 

* >T ’ '* tr - . i, io cue company neauqiqu? 

. ’ .’ ters in Atlanta, and Ihafc-jr.fc 
* J would be on the staff tli,ejfq.' 

. now request to occupy that 
RYAN: Travis and Johfrsbff job.” •' 

said they wanted to come a if cl' And he wrote back' ancT 
look into some things, andWs-aid: “We regret to inform 
uh, that, uh, I said well,’ I:you that we cannot assign yoQ' 
was on my way that afteiy, to that job.” I have it withdiis* 
noon. I had a 3 o'clock ap~ signature. ' . , f* 
pointment with the attorney, • • ns-if^/ci 

general, Robert Morgan — the A,U V D r ° u a l s0 say. tin 
next morning a 10 o’clock 1 O aq-T our EEOC complaint) that* 
pointment with Gov/ , 'Mn\ slncc (hal (ime > lhe company? 

Q: What date was that? 
RYAN: June 19, 1973, 

Holshouser — to acquaint’ 
them with Bell’s laslest : flliugd 

has refused to reinstate’' ybtf 
— that’s one. part of it aiicl 

for a rate increase of $34 mil- ! the company has harassed^ 
lion. , and intimidated you, ..HotTS; 

And, Rast quickly *saifl; the company harassed and in r , 

“Well, why don’t you go ahead 
and just do that? Go agdlcVoJ 
that.” ' 

And, T said: “No. YouTe'Mj/ 
here to. talk to my people 'and- 
you want me to be excused: 
I’m just going to leave., right 

(imidated you? , ^/ /v >, 

RYAN: Well, the harass? 

nient comes principally* frtfflv 
telephone calls. I had several! 
(job) negotiations with" banks: 
that were * progressing, / nqvxc 
now. I’m disgusted. rilr. satisfactorily for me 

leave it to you.” * have a j° b opportunity in aq, 

I said: “What’s it all! area tha t 1 probably... coul# 

about?” And he (Travis) said: have accelerated in. . 

“We’ll be in touch witlvylni’ And then. . as we .moved, 
Fridav.” Then I hung' -up al » n g alld S ot closer tP. tn.aH:. 
and) walked out. “ "'ling an agreement. I would 

One or more of them stayed’ suddenly be told that they'd 
the entire week and sliooks'up lost interest. And, I- ‘know 
the troops real good. Thfty.-.iu,- that, informally, people 'from 
tcrrogaicd all of my depart, the bank talked to thcwBell 
ment heads. Then. I got, .a'Vdll People in^itoillM^.nrolina^whp 
and went down^to Atlanta) ’wore (previously) subordinates 
Friday. We met for aboOl'IiVei 0 * mine - who transferred, .thgji; 

Here is the complete text of the statement issued Tuesday 
on behalf of Southern Bell by B, Franklin Skinner } vice 
presirtent and general manager -of Bell's North Carolina op - 

tirul'tO'iIS’ . _ 

Separations of employes at all levels of the business 
are normally a private matter between the employe 
and the company. However, since Mr. Ryan has chosen 
to advise you that he* was involuntarily separated, we, 
therefore; feel that the following statement by the com- 
pany is appropriate. ■ . 

Mr. John J. Ryan was relieved of his, duties as vice 
president and general manager of Southern Bell in 
North Carolina on Aug. 1, 1973,. because the top man- 
agement of Southern Bell felt that the time had come 
to change the general management of Southern Bell’s 
operational?' Ko?!h Carolina. By mutual agreement; Mr. 
Ryan retired from the company effective Sept. 1, 1973. 

Also by mutual agreement and. for Mr. Ryan’s person- 
al benefit, he was transferred from the North Carolina; 
organisation to the company’s headquarters staff in At-' 
utiUa .as of Aug. i, 1973, with the understanding that he' 
would retire from the company. effective Sept. 1,1973. - - 

• We have received notice from the Equal Employment. 
Opportunity Commission that Mr. Ryan has made a for- 
mal charge against the company. We do not feci there’ 
is any merit in it but we do not feel free to comment in 
any detail because this matter is now in litigation and. 
being processed through normal channels. . . 

Further, Mr. Ryan has informed the company that lie 
is initiating, a damage suit against the company. There- 
fore, on advice of counsel we simply cannot comment' 
on allegations by Mr. Ryan concernin g any of his activi- 
ties while in the company’s employ, or . the circum-.- 
stances surrounding his departure;. . „• 

! By NICHOLAS C. CHRISS j lf *was the opening gun of 
vvashfngion PosM. A. Times service j w hat apparently will be a 
SAN ANTONIO — “Water- long.-., and arduous bout be- 
gate’ ’is a gnat compared to tween the telephone company 
I the Bell system.’* and • the Oravitt family and 

, Oh , the morning of Oct. 17 Ashley., Allegations from both 
last 'year, T.O. Oravitt, the sides , range from sexual infi- 
ll e ar’d of Texas operations for propriety to kickbacks, dubi- 
' Southwestern Bell Telephone ous rate-setting patterns, polit- 
Co., u ~ scrawled those words at leal slush funds and wiretap- 
the u en,d;. of * a long, agonized ping* abuses through a sophis- 
note--' to- his son, Mike, to tieated- gadget called the "mini- 

whi'c.jy.j?e attached eight pages frame,’* _ _♦ 

. of •allegations against his em-f The two men had been part- 
1 Ployed jly responsible for making the 

• Then* Jie left the study of; company the third-biggest. 
•his $J 20] 000 Dallas home, went money -earner of 23 telephone, 
.to the garage, closed the systems in the Bell empire, 
door^'climbed into his car, Ashley had been a chief rate 
started * : the motor and sat negotiator for the company, 
iiuitil r; th‘c ! carbon monoxide ex- which covers Texas, .. Okiaho- 
hau^ fumes filled the garage ™a, Missouri, Arkansas and 
and '"‘kill eel him. The coroner Kansas, 
ruled! suicide. 

Sixteen days later one of! NOW A FEDERAL agency 
Grafts closest friends, ^ as extensively questioned one 
James,* H. Ashley, another principal in the matter and is 
h i pranking Southwestern ex P ec ted to investigate South- 

Bell executive, was fired from w ^ crn * 
his job in San Antonio. ,. The ^ompany s reasons for 

:: firing Asliley, listed by Lou 

BOTH MEN had been under Bailey, vice president of oper- 
extensive investigation by f tlor ! s in ® ' Boms, company 
company auditors and securi-f headquarters, included: 
ty personnel. Both have said irregular reporting, of work 
the investigations coincided ,ltne; probabl( t misus f ,, 
with their growing opposition r funds > lncludm § 

to the company’s rate-increase i th f e , for Cnnstmas parties; 
policies in Texas. ^inducing sexual favors from 

i-.* . . r female employes tor their pro- 

Gravm, ol f was being paid ( motion, and probable irregu- 
$9O,00m.a year as vice presi- j- ] ar voucher preparation, 
dent 'Hi 1 charge of Southwest- y a picture of the controversy 
ern Bells Texas operation. He p has come from the pleadings 
had;- spent 26 years with the’ in the suit, along with other 
company. Ashley, 45, was gen- court documents and inter - 
eraI ot^ merciai mana ger ini views and material from 
San Antonio, earning about other sources. 

$60,000. He had spent 23 years The company’s response to 
with 11 IM’ company. Both were, the allegations has been that 
“blue* drippers” in the Bell it does not engage in illegal 
.emfJii'c, marked for promo- wiretapping, , although some 
tiomiyott. employes could without com- 

On 1 -' 'Nov. 15, the Oravitt pany knowledge. The company 
family i and Ashley filed a $29- has also denied it set up pol it- 
miiljpn; civil suit against* icai slush funds, but it said 
Southwestern Bell charging employes were encouraged to 
that the company had har- donate to the political eanrii* 
assed.V’ffiem and the compa- 1 dates they preferred.. . 
ny’s ( busin ess poli cies were So far as rate increases are 
‘inequitable, incorrect, dupli- concerned, one officer said, 
citous," deceitful and grossly "We hive been "charged . with 
unfair to the public." i maintaining two .sets of books 

in Texas- — one for our inter- 

nal auditors and one for our 
regulators — to inflate reve- 
nue requirements and to ob- 
tain rate increases unfairly. 
Our books are kept in strict 
accordance with standard ac- 
counting practices and the 
■regulations prescribed by the 
Federal Communications; Com- 
mission." ' , " ,1 “ 

■j. Gravitt and * Ashley' were, 
j products of poo r, families in 
j Oklahoma and Louisiana,' 
young men looking for* securi- 
ty. They found it with the 
Bell system. "" i; , *■ 


* lived high as they ascended 
the corporate ladder to higher 
salaries and more responsibil- 
ity, Ashley said in an inter- 
view that 'he had indulged in 
occasional sexual dalliances. 

, with female employes. 

"It’s hard to avoid, it in the ^ 
telephone company," he 
ladded. ."There are so many 
jniore women' than men in the 
offices. Some practically 
throw it (sex) at you. I think 
promiscuity runs rampant in 
ibe Bell system," 

( A Bell . company .officer 
j vehemently denied this, 
i As for Gravitt’s death, Ash- 
ley said, “He was a great 
.family man but I think he 
began to panic. They (securi- 
ty agents) were getting close 
.to the females and he was 
jelose to his family." 

| One of the most revealing 
[aspects of the suit has been 
allegations concerning the 
“mini frame” wiretapping de- 
vice. A number' of sources 
say it can be activated at. 
company headquarters. 

The device reportedly is ac-. 
tivated by placing a wire into 
a grid that corresponds to the 
exchange of a person’s 1 tele- 
phone. The number is dialed 
; and any subsequent conversa- 
tions can be monitored by 
voice-activated recorders. The 
person being tapped does not 
even hear a dick. 

Federal law allows tele- 
phone to wiretap 

while investigating the possi- 
bility of fraud against the 
company by phone users. • No 

court order is necessary in 
such cases. But Ashley sug- 
gests iha^Jw-Aaittetap capabil- 
ity lias been abused by South- 
western Bell. 

Many of Ihc Ashley-Gravilt 
allegations have been backed 
by a third high-ranking for- 
mer Beil executive who re- 
signed' after 26 years. The 
man. who asked to remain 
anonymous, said in an inter- 
view, 1 ‘There’s plenty of dirty 
linen to be brought out into 
the public, but mainly it’s the 
wiretapping and the slush 

142 top Southwestern Bell exe- 
cutives hacl been required to 
make political- contributions in 
the 1960s and that for a long 
period they each had given 
$50 a month. Later, officers 
simply were given $1,000 rais- 
es and were specifically in- 
structed to donate it to who 
could help the company most, 
he said. 

“We had no choice,” he 
said. “We were required to 
make the ‘voluntary’ contribu- 
tions.” ’ 

Ashley said Texas had be- 
come the biggest earner in 
Southwestern’s five states, in 
part, because the stale had no 
public utility' commission and, 
consequently, little regulation. 

The company deals with in- 
dividual communities, few of 
which have the knowledge to 
deal with complicated rate-in- 
crease cases. (In North Caro- 
lina telephone rates are set 
by the N.C. Utilities Commis- 

“I was responsible for bill- 
ing over $30 million a month, 
from only one-third of the 
state,” Ashley said. “Imagine 
the economic weight. It’s not 
the illegitimate contracts. It’s 
the use of legiti mate monies. 
You lcarlT now tS do business 
with a city councilman who 
has ,a printing company or a 

hauling and storage company 
or an architect or contractor. 

“From the, very beginning 
you learn to get 'along with 
key community leaders, to 
win their, confidence, their 
loyally and- their commitment 
to win higher telephone 

Ashley's allegations are bol- 
stered at least in part by a 
March 1974 memorandum 
written by J.M. Good, then a 
Southwestern vice president, 
who advised Gravilt when he 
took over the Texas opera- 
tions: # ' 

“THERE IS no question to 
what the Southwestern ap- 
proach in Texas rate cases is 
out of step with its approach 
in Missouri and Kansas and 
with that used by other Bell 
system companies.” Good said 
“it -is quite possible the _ pre- 
sent approach may, become 
untenable” and that South- 

'Sell’S npnrnspji 

also out of step with that of 
other utilities in Texas.” 

Before he was fired, Ashley 
tape-recorded statements from 
company officers, apparently 
in an effort to gain informa- 
tion to use against them. He 
did not disclose how many 
conversations he recorded but 
/he has turned several over to 
[his attorney, Pat Maloney- of 
'San Antonio. The tapes were 
•made without the knowledge 
of the persons to whom Ash- 
ley was speaking. 

Texas Beil has lost about $5 
(million a month in new reven- 
ues as the controversy sim- 
mers, Ashley said, because 
many rate increases have 
been held up by Texas cities 
since the allegations of the 
Ashiey-Gravitt suit became 

“■What we are doing is* im- 
portant,” ha — one 
else has done it before, but 
things need to be made 
right.” ‘ . . , • ./ 

FD-365 (Rev. 11-27-74) 

'—Jr- ' ' 



Transmit the following in 


( Type in plaintext or code) 



. L . 


Director, FBI 

From: SAC. 










□ •CR Q EL □ DIH 



□ CRA-64 

□ PA □ PE □ PF □ E 

□ CAA 

□ AP □ IWFC □ CWAA □ FI 
r~l EID □ Bomb Threats □ Extremist Matters 

I | White. Hate □ Black 

Summary of Complaint: 



No further action being taken and € 

Q LHM enclosed ra Copy to: 

FD-376 (Enc. to LHM) 


being submitted 
H Report being submitted 
I I Preliminary investigation instituted 
| | Limited investigation instituted 

I | Investigation continuing 


JAN 20 1975' 



Special Agent in Charge 



‘U^^Vr^,- - V-. 1 
f A?’*- 1 t-'\\‘ 

"• 'J , ‘^-)v'-»v'l|’- ( , 4.i ••„ , t , ( T«» '• | \- 


^gationi T 

KO§ i |||^^ 

.-■. ^, MT ,,- Vi -, : •,. By MIKE MORRISON , . 

- , • v— ^. T * ?r V /^TPcxa*^ ■ Writer y ! 

City^Cou^ “Ma” /Bell’s request 

for. a.24;2^percentTate increase but a barrage of damag- 
ing allegations -'has /.placed ’the company ’s’ request r in 
• jeopardy^^^^f, iyfc'.- ^ <■».,. •-••,’•• 

Bill, Holman, former Southwestern Bell Austin divi- 
sion manage^ saidTuesday that Bell had given printing 
workman AustiniCity Council candidate and promoted 
the candidate’^ daughter w was working for Bell to 
gain .support for- a recent Austin telephone rate hike . 
"Well, certainiy,,it was payola,” Holman said; " 
This latest charge “will have aneffect on the councirs 
decision,” Councilman Bud Bidden •: said Wednesday. 
“All this news makes the water kinda muddy.” 

City Councilman Dan iLove said he would support an 
investigation^o|#ell by the city if “City Atty, Don 
Butler recommen^sU would be in the best interests . 
of Austin;” ■ y’ 

“Today^svallegations have been very harmful and will 
only, promote delay Councilman Lowell Lebermann 

said.; .. , '\Mi i , ■ ^ 

Holman ciaimedfnearly all thescompany’s district and 
division .managers/:; in Texas;: wereLipyoived in dis- 
tributing gifts and^illegail • campa^n;/cqto 
His revelations were included ^ filefyby 

former Bell manager James AshleyJffilKjrcourt records 
in connection witfran antitrust suit filed ^against Bell by 
San Antonio Telephone Co. , . : ;/;T 

A $29rn illiori suit} alsoftas been filed 'against Bell by 
.Ashley and the family. /of ^.O.^Drayitt, head of Bell’s 
Texas ,operaUons$i^ Dallas:; 1 

The Ljanscript^^^ 

. be tween SAshie^ 

firpri a pH ^Hnlm a ni s.V iirr pn f 1 v on “speciM assignment” 
for Bell. : 

{Indicate page, name of 
newspaper, city and state.) 



- 1-16-75 


Classification : 

Submitting Office:S AN ANTONI 0 

| | Being Investigated 

3kdl£^. P f 


SE R I AL I ZdDCL<f ILED . ,\y. . . . 

JAN :j 



ipr ’.f ^ 

t^i^£i|jL^£Quncil unanimously a 

l^ecision- pn Southwestern, Bell’s 24.2 per^ 
r'cenit^ra te ; increase', t reguest ^Thursday 
;^hne\sbrne f of .the :coimcilrnen Responded 
*Mtp : accusations tha Uthey,freceived illegal 
.campaign contributions)from ©ell. 

.The council, TneanwhU^^ its , 

;'6wh:inyestigatiq Coun- 

.cilman^Jeff Friedman said ’he felt that 
^actiqn;;bn the. increase would, be delayed 
jmnti^the investigation, "which was 
^authorized in council executive ^session, 

1 is^tcompleted. . y: ; , ■* "■ ! 

, I^Tn^Vdam aging. aliegations;aimed at the 
icoiincilmen came from Bill Holman, 
7 jjornj'hr* Austin HelF; division ■ manager. 
f? 7 " ’ 7 i : ;%lman';stated iri^cpurt transcr^ 

' ' t^l > ^ ij^ayor Rov . Bu tle rj^ Mayofr^ 

/= ^^byC,^tornier L'ounclime n jBerHiand co^ , 
(j j illegal Bell 

V ELAf^ in 

/ t^|f Bell , 

c - " u \, . v * j.rpanager]^ court ■ 

'{ " ■■ H"': \ * Records: 'in : ■ S^n vAn fohio'* irf^ * connect] on 

ivvrth/an antitrust ;sint:filed:fagairist Belli 
■fcfegthe nqw-de’func.t • ,Saif Antonio { 
Telephone Go; . ! 

; . press conferen ce- earli er in the 

da^fiButler admitted, receiving a con- 
tr tipn f rom * .Holm ah hr ?h i s 1 97 1 
. may ora i; campaign^ * I hh ve^never ; a t- any 
tiniS ..received- campaign contributions 
fromj jBell. 1 did accept $200 from 
Holman,, as an individual, ’’^Butler said. 
••^State" statute prohibits'-: corpora te 
.political contributions. ^ 


HOLM AN ALSOsaid in .the transcrip ts 
hlTga^e Bove a Bell printing bontraci.^At 
the;, press conference,, Love said^'Lhaye 
never denied :to anyone tha t Holman; con-, 
tacted me:at my ad agency irib 1972,- and 
the end .product was; a •’ brochu fey con-’ 
tract” for the Bell Waco division37^‘ 
Love said he had not found in any of his 
campaign political reports ariy^coh- 
tributions from Bell or its employees^; 

“WE DID A job, yes, for Bell; at^aAnei 
profit "ltd : the -company mf •-$15Oil0Love ;| 
said. V 

Handcox, also present at the pressjconj 
fererice,- 'said he had fpund^n^lgjM^; 
tributions -from Bell ,or :its vempibyes^iri- 
his. , ; cafripaigh financial- records||ltl|ja. 
contribution .of this.: sort 
’wasn’t a check or made 
sonally.” ' - 

In the court transcripts, Holman:' said;, 
he contributed to Nichols’ unsuccessful- 
1973 council .'.race and ’ gave hith'jsbme 
loca 1 real ‘esta te b u si ness . f . 

Nichols, a candidate in thisAspringls' 
council . elections in Place l, :; wa%:unr 
available for comment, Thursday^f^k^ 
“TTHD^In EXPLAINED thafthe-carn- 

(Indicate page, name of 
newspaper, city and state.) 



b6 > 


Date: 1-17“75 


Class! fication: 

Submitting OfficegAN ANTONIO 

( 1 Being Investigated 


)AN:;0 1375 


^paign ^contributions and , business ?deals|g^ proposal ; Bryant ;saifr 

,y vjpy 

revealing : .ohiy ia;\$200 coin tri But icrf J ^ 

L Holmari-?6ri ' ' April^;^1971v^^ ’ -et 

:|is on ly , on e ;ima ri J s i version;’ 

: However;, -Butler ; l;oye' arid Haridcox 

-poss^le-th^- might have un- . slush fund when the largest figures men-: 
k iimvinK ly receiy^ from ^y^tibri^lar^W:^^ 

#Rii 1 1 pf'rnmmpn ted “1 1 mipht ; H p mnrp 

SPEAKING: TO the council? )Bryarife;;gdo^^ 
said it is ' ‘ridiculous to talk : ofe^ political ^ and San 

I i rid i y i d u a Is %th affiw a s' ^a c t u a 1 1 y Bell 
money^v ? 

It might? Be ;more; 
ia deriisio^m^the. 
Until ’ ’ . 

, ; Juria ni m ous de ci s iori^to: 
requested isp leas e d 3® ,e|| 

' ‘ “ “Austin rates a re- cme:bf? 

Bryant accused.ithe‘eou^ \* ‘stalling 
At tlfecoun^ his- •; and stopping the mills : of ^justice-T 

riompany- s $15(^ prof it was ’’supposed to-y^:J)ecause<:of the; current "allegations? < 
influence , Tny^dec^ rate-making, In ,a?prepared : statemeritv, Released 
il ljeri M^H ril mantis sick.” ;^|:^:j{^h|UTSday , rBblT denied . ffdJrn a py S 

Asked' if he ^ thought it was a conflict of^^ailegatms, «tejtoing*-ti[em : - ‘^feallf^truths,?- 
interest for. a councilman to accept cori- J |J!f hearsay:, and innuendoes : ” . , * 

tributions frdm^Bell executives Handcox;??]® .THE STRONGLY worded statement 
said, ijlt'woufeb^ to figurel^^nontradic ted. ' Holman’s*, allegations- on 

out whose contribution yvas a conflict .several ' counts. Beli’s statementr.vdis^ 
•whethei#|it- tie' la? $3 .‘or a $300 corn. counted his testimony that Bell waived at- 
tribution: ” ' i ‘ : ‘ oV $20;000 telephone bill run up by former 

BUTLERrSAIMe did not receive any State A tty. Gen. Waggoner Carr by pay?, 

’contributions'- from Holman in 1973, but jng for legal work that he never per- : 

‘ there ..was no reason Iwhy I would not? J 
have accepted: such. a contribution. v|. J 
“If someone brought you $2,500 ?;kheri;f ? 
you would. question it,” Butler. said? 

\ Butler and Love announced earlier this 
month they intended hot to run for •ref® 
election this ^spring. Handcox resigned 
j last ^weekvito^fi^d the state ..equalappoif-^ 

I tunity employ inent office: “ • ' 

At the public hearing, Austin division , 

|'m a na ger GTaywpBryant discussed 


• r . Bell Termed distortions 'Holman’s 
accounts ;ofr corporate^ 
to"|huy football tickets ‘ arid Scotch' 
whisky r to build ..a fence and to baby ska; 
•’f o rmeir ; c o mp a n.y p r e s i d e-nt Js* 
grandchildren. . , . *'V 

sta tement; admitted? the 
telephone company, gave $2,400 to help 
vision? expand the University of Texas football 
i s s e <L. ;;££stadium. /»*.’ 

| allegations .'/That*. Nichols’ daug^fer^jib^^^ charged)to; a 1 

I ikem ployed [Jby Bell? was. promoted not part 

kuence f Nic&l^?vote on “the -1973^ expense fc^^AustiriyPf 

request. ?She:|?started. with.. Bel l^a ^ o t h er- J c i ty: 1 s ; exchange' ra te base® 

' switcKAio^^ three? ^ 1 *■ . : - 

years .before ?N ichols entered politics, ... 

• Bryant said. . •’ ’ ‘ V®??' ' 

j BECAUSE; :OF HER?/:6utstandin^ - 
ability ;” she was .promoted to a manage- 
j rnerit ^ positioa::and\ givem a A^wcent 
' raise. Tlie^ ^promoiion^ ^Took; placerin July, 

, 1971, “wh en no one knew; wh at the Ck v 
;Cquncil'^ig^ drate> increase 

(Indicate page, name of 
newspaper^ city and state.) 


JEsiday' , iri San Anton 

board of directors meets'; Wliiteysaidif^f' 

ipMpMeE/fb’. probe Southwes- • approval, to any^andiri^fQ^tBellMi^ffi 

MMMtimemtione Goniii 

piit^y is ; vVe ink sp.on sored; by 

a,ri u ? :* •• f • - . ^JvVV probably - premature be^us^^cf^lile^ 

feFib^l de termination on a consn)tani j^yjs-pTttie cost oft.the stud^\viti|Mfc®e5 
j|t^^^nandle the probe will be niade^cpymlable lintil Friday. ;V 

w * Tb/-'pitip s n> f Alls fi no fell a U 

. Worth* have als&earm&ift^^ 

’ ^ . study.'under antearlier pro J ^ 

• o nlyT'fre .;nia j or: slated^ 

, ... f.tieipatejiWhit^explained^^ 

, f . *, . ‘ ticipari|i fe ihumtief abouj 

will 5, therefore be less. Tory eacli® 

• . ' ; . ‘‘ The.stuSy will focus, oil ^I^^SetKbyl 

. / Bell and ^othei^rt'elepliqil 
' figuring allocati ons oft 
, revenues -from. -long- disrapoJeian®ofe*afl| 

*'n "* ***? i* *> y * v ■ yfepMc 

. calls , , . - ' 

The distinction .-is i m pdf ttrit|b^ca : ti|# 
the figures are- used 
pariy for both establishing § xp'en g e Jan d { 
reveniie : statements used 
and in preparing B e 1 U etiui-i)me®y^| 
property v alues offered forTaxl purposes^ 

PAGE 3A’' 


: Dat e: 1 - 27-75 



Submitting Office: SAN ANTONIO 

j | Being Investigated 

54W H- /$ 

(Mount Clipping in Space Below) 

fMay Be 

v • and . 

Texan Staff Writers 
Mayor. Pro .Tem Dan Love, may be 
forced off City Council if allegations 
are .confirmed that his advertising 


^V-Texan Staff Photo 

, : .’i ■*, ,/ • ■ *>:¥- 

Bell during his ; second council term. 

'The media Vdirec tor of the now- 
defunct Dan ‘Tove.. and ^ Associates, 
Roy .Butler Jr., said. ‘Tuesday that 
the fir ni held at least 'two contracts 
with Bell through ^ mid : 1973;;;\ \/ v ; 

.Butler . is no relation to Austin 
Mayor Roy Butler .«f ; - 
The Austin City' Charter 
specifically prohibits a councilman 
from engaging in business with a 
franchise holder of the city. 

The charter states this violation 
“ shall ipso facto render vacant the 
w otfice held by the person so violating" 

it.” • - V \ 

Love will- be forced to, resign jif* 
City Atty. Don Butler recommends 
it. He has scheduled : a .press con-, 
ference for 10 a.m. Wednesday. & 
Love denied any knowledge of the; 
alleged contracts but said he would; 
“take full responsibility’' for the ad-i 
tions of his associates! r 
Tuesday, Love said he requested; 
from Bell “a full spectrum,; audit* 
reflecting all the wo rk^my company* 
has done for them from 1971 -to^the;! 

/ 1 1 i. ’i ' m s* ' 1 ^ v* v * ** ’! * > t 1 y 

Earlier -in the .wgejIl^Lbv^ra^ 
vmitted|a ; preytoi^Gha^ 

Tor the Bell : Waco):diyiybn < 3uri^fes| 

: 1 f irst jcounciL te rniy . • y &$$$ 

; His' subsequent re-election in :1973l 
removed the necessity of resigria£ 
tion, City Atty. Butler said, 

Love’s resignation would leave : 
two vacancies on the present coun-; 
cil, and according to. the/City;* 
Charter, a. special’ election would ; be<: 
required to fill the second vacancy^ 
The char terTurther, stipulates that: 
the special election must be called - 
within 60 days, thus raising; Th#; 
possibility of two City. Council -elect;!; 
tions this spring. 

The regular council election's? 
scheduled for . April; 5., ... 

“If Love vacates his seat, yltS 
appears to me there would be two^ 
elections for this seat,’’ Councilman? 
Bob Binder said Tuesday night. 

' Joe Riordan, Bell public relations; 
director; said Bell was working on'} 
Love’s audit request, but it would;* 
not be completed until sometime; 

{Indicate page, name of * 
newspaper, city and state.) 





Date: 1-22—75 

Edition ; 







Submitting OfficeQ AN ANTONIO 

I | Being Investigated 

•St • ni-Je 



(Mount Clipping in Space Below) 

j&ve Res ig nati on Pos sTMe 
I far Charter Violat ion IT . 

"'.^ v^MIRE MORRISON or, se cond council .termvi\ffiT Cl T;jf 

% vHnc ^ ' ’’ -:l- * 7T the violation" occurred \during,ithS 

WALSH; • first; term, Love!s subseqUentefe 

' "Staff 'Writers'. .. a , . ■ >a second term in -'April; -1973, /may iKave^j 

^<Gi^ said Sunday he is ^removed' the. ..necessity, of>resighationf * 

driyestigating>‘wh Mayor. rPro Tem /Butler said.-c. - 

?Dari;^ Love’s ad- "' Two or three weeks ''..after itHe Initial;.. 

‘rnittedWiolation ofthe City Charter. contract, Love said he refused a second' 

^'Th^yiplatiori^oc ‘in 1972 when Bell contract because Butler -adyi^eci;; * 
rJ^yelVai’d;:h a printing job him against it; v / 

;from:Squt^ without knowing BUTLER SAID that he-’did\not;realize^ 

;the VCity^apter ’ prohibits such an ac- that a' • charter %iolatiori^ . 

j tioh -i* * - Vv ■ because Love had already .completed qne\ 

^theVcharter by doing job. ’ \ 

ibusipessL^o^ vSbuth^stetn", V"BeIl . But •„ .. ^However, Ix>veHo]dTheiTexan he-was^ 
JthereJsVnofiqu an t very specific when ^he , told 

<dn willf IKeydhar ter ; ’ ! • Love first-job was completed. 

; ' v v \; v conversatiohjverbatim i'n^’tHis.^a^^l^ 

J S e c t lir^ Article XTI of the Love: y ‘Don, ^^ye ijust^o 

^ . . theTtelephoWcomp^ 

^rjl ‘ NEITHER ‘nor 'any other/;;.; ; ed^evtn ; do another/^ 

;meml&^ nor/swy^ectiyc^ 

iprJappointi city -shall ’be (}*• , flipye , ^‘ : Yes-? ’ ’ ?. ' 1 ' ' 

Sfire*ctl^ , in the 5 erriploy^of ■ j? ;l ©utiep; “And they've 

or corporation ; , another?” _ , 

jHdldirfif^ to hold any- franchise Love: “That’s right. n ^tJ'1r?y%?®S 

;ih^th Je^i^:c^?Austin, or shall, receive Butler: “Don’t do 
:&irectly5^ any. wage , -commis- Asked what his ' actions, ^would'^hay^ 

sionv;':fee v / l igif . or payment" from been if he had known about the.;firs^cpri^ 

r ^uclf frahchise^holder; and in viola tion of * tract, Bu tier said, “I don’ t 

ftiiis sec tidn f shall ipso facto render va- just not sure.’’ • *! 

;capt the, office held by the person so Love said he didn’t .reaiizejhi^v’iol^ipgt?;^ : ; because “I didn't reah/the:’ charter^ 

Butler- said he needs the specific dates ‘ , throughout. I just 4idri^fa'ffier^toh^^ 
c t ’ to . dfe termine wheth er IF BUTLER recommends ^tShe tj 

f the violation occurred during Love’s first resign, Love said he would do, so :but€ 

{Mount Clipping in Space Below) 

-Mayor £ro. Tem.Lila Gdc^reH., 
^rein ark e U T h u r s d a y.. >0 1 her-, counc i']& 
>;m e mbers;aJso;deciined to take it up-a^airi- 
’;5hflt\v.;v:: • T..7- ' :** *... 

Sbe^co nfi rm e d : a • B e] 1 . r eg u es l •t&dlsciissi 
ma(len!had] ^beenvdirectefeafther^ 
■teacher inUhe week. ’ ‘ } y^fafy ;» 

Meeting 'declined; 

%?®^ ver '- s * ,e declined'ito meetiwvithkhb ' 
‘•.telephone officials, ,Mrs'' ! : 
?Coeknell said. 

^Other : council 1 members, , among' them t 
Qr.yJose San Martin and Cliff Morton T 
'confirmed .similar contact with Bell- of- ■- 
Petals. . Councilman Bill'OiConheli.talsn'' 

,;X DIR? CARL WHITE -' -. 

T •*'?• , 1 1 ■v“Not surprised”.' 1 


■' . ..Sduthwestern tX'Xt bejt' 

Tele^honigfCo. this^bekf 

renewed, effnrtc 

■ approval lor its area- 

wide rate hike reqiies^^ 
i Jhe;; move' ;eame}in the form -of 
conversations iwilh-sevieral council 
members: initiated by : Bell of 
ficials. ; ' Mrrj; '••'■ 
told, t hem 1 wouldn’t deaV'vvilli if 

fthcate 181 ^ executi ves ''rphhrj' c ; 

.The.-move' came as no surpri'seifto ’Citwl 
‘P a o nt n D ,iT- 'Carl White. WhitejpoiirteP 
■out Bell officials have never indicated^ 5 -: 
wish to withdraw their' rate hike package 1 .'' 

, Anticipated 

'“They have not told meMbey are ready? 
to withdraw. I know they’re' sfili/afit 
ticipating some kind of action ” White 7 
. remarked Thursday. 

Since Beil put its package on the ?: courtfcfr 
table for review last. September;,- While', 
has been named city utility supervisor-in*- 
addition to his financial duties. 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1 -*2/^7 5 

Edition OME 







Submitting Office: SAN ANTONIO 

' I 1 Being Investigated 

- IB 5 



SERIALIZED^. ... FILED. . . .1 1 i, 

JAN 2 4 1975 

S . A h * - A NT 0 W 1 Q. 

(Mount Clipping in Spoce Below) 

, Southe stenOB ell Tele- 
phone Uo. is to stop; any^ , 
illegal \viretap|i^^n(^f 
is "to 

documents thai^Jnli 
evidence in a >$ 29 J 2 ^ilf^’ 
lion spit “‘'agains^tiiel 

firmly. . .. ^ 

„ That, is a . cbuFt^ordenissuedi 
M o nd ay' 1 by 1 " 166tlV‘ to ist^/J u d ere^ 
Peter 51 Michael --'Curry ‘ who 
added he is nut acknowledg ; 
ing* Bell had wiretapped or 
destroyed documents. . 

However, he said he is a I sot 
n ot denyin g s u c li acts li a d v : 
beenTEWJd.oul. • - 0 

. v Gr.a\>ilt • co mmitted; filicide. ^ 
iiinv B el 1 had ; a ,t a p. on *• 
^AlshJey ! s;-hom^ • £ ,• 

|£%sh 1 ey : : aiscriest if ied : a bout ' 
a Ti)73 incident in which he'’ 
.said a Bell lawyer supervised 
cth'e ^purging : uf firm files .of 
correspondence damaging, to 
Beifs position in an antitrust 

"TTTT * l Slic:k’' Patterson of 

The Tu finSac a m e after ra 
seven dVou r)h e a r i n ^relating 
to a yl a m a r g6 p \sji i 
Belfiby .J ariYesifT; • As h4 ey'ancl- 
the TbfQYGrayjjS Yarinl^’Y^ 
Ashley wasfNrediis ’a Bell 
assistant vice -president Oct. 
31. Gravittvwas ’Be|l\s;JTexas 
c h i e f w h en li e coin lii it ted 
suicide in Dallas last October. 

Ashley tes tif i ed- ; : Monday„ 
TTFuT 1 it the- \veek r TTeToTe 9 

■ " Houston t e s.t*i f i e d Jie, had, 

;; • S £T11T KETFtTi e* phones. m as h ley-;’ 
A sli ley’s .attorney*. Pat,, 
Matoney ■■ - 

iiy-.Tlre wiretap expert said he 
fou nd Hi ey ’bo t h h a d ‘ bee n 
tampered with, but neither ■ 
had wiretaps. 

Bell security chief William 
,1. Jonas Jr. denied knowing 
of anv incident in which Bell* 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1 _ 28-75 . 







Classification : 

Submitting Office: SAN ANTONIO 

j 1 Being Investigated 

{Indicate page, name of 
newspaper, city and state.) 










1 - 28-75 





Submitting Office: SAN ANTONIO 

[ ] Being Investigated • 

FD-350 (Rev. 7-16-63) 

(Mount Clipping in Space Below) 

*klf ' 1 : r ® 

i Jr ■>- Iraunfioml^fh c ; a d s • B eBvs^i * 
.. ’ . ia=5.o f f i pc , : ;yth eX*sj> oke^ nVafit^- 

•'Soll% ; W;este rrf "-,. B e t li e« t-wo: ill en -a 1 1 eg eel 1 yiitia lk-v^ 

• poenacd T ire d *>B e ll ;e xe cu ti veCf 

;Ta me s'iH.;>‘Ashliey Vain'd- >B ilf} rsuptaaed -nig 

Bel l-^Aiis ti n id isini c • XS" - ’= > t e tl; n t i-lt r u s t ; f vs ui tr; 

^^Bo^T^^w6r^'4ub|S'ena■e^;^6r•J^-^ a *RSt^the^ll!Systg^^■;^^^';•^ 

aii^p^anance^beforcith^si ®.srtv<popies-($f?£he'(tene's;? 

refuse^' tfi-‘ 


■ .A^spoucsniairvi °r^ei^bjUQ^.* ■ v v Tiffed n a ii d y utiymtefrM on!© 
y 1 ? Hos^ :^pei|^ingAvei^>i 

* ?T?^’ W'X-. »? v q?tigaUopr } )uy ;; m ai n'l v. Denver niiicnl a cents* iri-v 
: (\\ iVrtnnt. *-knn\v.s\vh v, .the'-' : : ^rr^rrr^- i- - j * i ••• - -:■ 

bid *-n o t.^n nw^-Avh y- ; the biYv.cs- , , ;: ; j nr $ ateef crirri i na 1 
•iTgtilxoivwas 'under way • * <■ ^ c./a5 •• -y •■ .-•■<'■' 

(Indicate page, name of 
newspaper, city and state.) 



Date: 1-28-75 

Edition HOME 


Classification : 

Submitting Office: SAN ANTONIO 

{ ] Being Investigated 

SEARCHED ' .’~FdEXEcT, .... 
SERIALIZEEpU... FILED.. ..fib.. 

1 JAN ZB 1975 


(Mount Clipping in Space Below) 


Two Southwestern Bell Telephone Co. employes, a former employe: 
and an Austin reporter appeared before the federal grand^ury 1ier& 
Tuesday aV-it apparently launched a probe into Bell 'actiyities:^i?r^ 

The U.S. Attorney^, pffice 
| declined to say what the 
; grand jury is iny.estigiating or 
who has been subpoenaed. . 

Bell Vice President and 
General Manager C. L. Todd 
said he does not fear a full- 
blown federal. investigation or 
any information that revealed-by it. 

“We are. glad To'see it, in 
fact,” Todd said. “It can’t do 
anything but help us.” 

Four appear 

Sources said Tour men ap- 
peared before* the' panel 
‘ Tuesday. They are James H. 
Ashley, Bill -Holman, Ward 
Wilkinson and reporter' Mike- 
Cox. .» 

. Ashley, fired San" Antonio 
;■ general commercial manager 
j for Bell, and Holman, Viclor- 
i ia Area Chief for Bell, talked 
of political contributions 
; made by Bell executives in a 
taped conversation. 

Wilkinson Ts^Belrs assis- 
tant vice preside nPof public' 
affairs in DallaS-AHis- duties 
jprl'jrM a r egistered 

lobbyist in Austin. 

^Articles «r 

Cox, an Austin American- 
Statesman reporter, appar- 
ently appeared before ‘the *; 
panel to discuss .articles he-* 
jhad- written on .Bell’s aclivi- •( 
'ties in Austin. 

A spokesman :in the U.S. 
■Attorney’s office said the 
.panel will not meet Wednes- 
day, and a date has. not been 
.set for re-convening the jury. 



A March 24 trial date is 
, being sought .by originators of 
.the $29 million ^damage suit ! 
1 -against .Southwestern Bell 
' JTcleRh one 'Go .. • \ 

. Botlm issues.- vvil Jhd^Ts- -- 
ycussed TeKyHh- ; 166 th JDis^C 
Strict Cou rt. Hear: ing A v; yJ; - 

: The theiMarch^ 
Trial date said- a firm 'datafis 
needed due to/tcompleiity of^ 
; issues” and 'The-T; 1 o’gis t i c sH? 
r required in .,assembling;\\Tr-| 
:.ious witnesses.” 'A/Ad 

A separate motion ’ said?? 
depositions, had .notJbeen^ 
signed andbfiled by ?Beil:e’x-'V 
ecutives CAL. - Todd;/;. Porter^ 
.Mitchell and B ill ,Ho InYan ; 

' ,<Todd- and Mitcheli;;refused^ 

• to answer .more Lhan-AOO;. a t-i; 
torney’s q u es l i 6 hs..ea cli . d u r-St 
ing deposition- .sessions TDecS 
19 and. Dec/23; 

On Jan. 7, They- .were&brd file \vritten ahswersT 
to the unanswered- questions 
L^inlmaJl gave His- deposition 1 ^ 

.James H. Ashley ‘and’ ;t he 
■Taniily of ' t heMate Ty 0 . , 
Gravitt also seek to /compel 4 
. three., top Beli .officials • to. *j 
respond to q uestions t hev lefy ■ 
unanswered im depositions. 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1-29-75 

Edition tIOME 
Au thor: 




• or 

Classifica tion : 

Submitting Office: SAN ANTONIO 

j j Being Investigated 

.O i 


JAN 2 9 1975 

vv. , t*;* 1 *’ 

1 ;W 

^^:-r^udge^d ted''ti^ 

- ? ’ ^Tliej^udger Himself- ‘ipoinl^r ! 
r\ ed-outvinf t he f :K*u I i ngUtia Uh e>i j 
P not acknowledging 1 .an v* 1 trii th v ; 
• of Hi explain tiff’s-a 1 lega iio iisof;; 
•* wii*etaj)ping; ; ancl d estructio if .j 
; of.recprds;”vTp,dd sajdV v k’ 

T ; , , judge iCuirry, in .makingdiis>- 
I i;u lip g-;Mp n d ay, -saicl he- .was,; 
y j o t'a ckn o \V 1 e d gi n g. \vi re ta pT- 1 
. .piiig-s or flocu ni enudestrii cl ion { > 

; * had ,beeiv carried .out iby; Beil 
a. yi'le . a I s o is aid Jlie - ..was }no ty 

■*,* a 4 u ^ K'u u'ii *' ' 

, ,-r g.y i '^'a# 

. Be'lh 

Telethon er^^-as^' 
: doin-g;something;;i;', 
has ? not\beeri doing; 
Bell .i^i ce ^Pr esident ' 
C C ilitC - T odd ; said: 

: Ttiesdj^ 

Toddiaisd said-ailegatiojis',; 
of wiretapping by ^elliniade? 
by av.dismfssed executive ih as; 

' . - T; 

Federal jury, quizzes*:^- 

r .4 ; iii fBell, probe, ;3A ; 4;'£: 

■ i ■ i. ; ■ 

shaken tiie^fa i th‘,of phone 
. c o m pan \%c u s tern e r s ; • a n djiJtHe. 

Dist. Judge L 'Peter Michael 
C uhr\uMonday ord e re.dr'the 
phone.. comp any - esistd n 
unlawful ^wiretapping and ,to 
preserve! corporate- ; .idocu.-. 
meats' that* might be evidence; 
in the $29 '’millionVlawsuit 
against/Be|l; . 

‘ ‘ W e.vr e. dis appoin ted;i in 
Monday’s court, decision or- 
dering. us- to desist- from 
something that we’re nol> do- 
ing,’! Todd, also general 
'Tntrrni-w'nf Bell hc ftrsamv ”- 

[[ against; 1 ® 

• p Ttele jJHo'n e^Tlleg rap Itfbjf 

kiJ e- 

' i vianii^^ tGravi it ■ 

f ; i •<&} 1 & ;-'k v 1 

k jy/bini^^Sve^k ^fore'.he- com- ♦ 
vjlihmitted .siiie id ey(on Get: 1 ?)jv 
■;* | v X h a t ^B eli^li a d;a*t a p 2 o n - A s h - ; 
pT:]l ey rS/ii om e ?pb 6 he *t %% '. . : f : . - 
1 d ,!?. iH-e^ai so ;to 1 d tabou t a -n/i-h- ^ 
a * .ciden t, in nvh i ch^b e sa i d i ?a 'Bell • 
■•-5 ^t’toniey supemisedLthe purg-. . 

• : j : .mg' >. qp^company* - ifi les “ * ip -• • 

. ‘vreiiipyejcorr^spb nil ence 1 1 h a t ; j; 
* r : rhyou id -ibe;riamagin'g to Bell’s .V 

f '• : posilionjii; ;t H e \S a iRninriiTB; : 

;/ V/v.Vi- /*t b at ' 

J ;$ir~ . sA s 111 e yj-c 1 aim svt o -ih a v. e 
ioiind. evidence, of daps .-on - his 
4 ^line after-./all 'the ^charges -he 
; ;has; 5 been' making about \yire- 
k ^apsuVTh^uestion ^really as,; 
' psi^re^n-;liis -line,, who; 
l’f *: u t4t h e nikt Ii e re sand when.?.”.: 

,4 ^h3?VjUbas7neverntapped Ash-: 

| - ’,5)ey^s%p : Jhis x , attorn eyjs U-e 1 e 
f.j . on^i‘ ; ^i^Aye-:d o li b,t ser-J 
. j ’ ,>i o u s li } ill at 'any 6 ne w o u Id. b ej 
4 : ;fo o li s h T e noli gfe^t od t ap v At : h o s eJ 
’ k phones, ^odd-said V.'i ;A 
'\i .v f/Tpqd‘^^saitf 7 it had been] 
k a 1 leged vi h ;th e t ak in g of depo-'f 
- } 'sitions thht- Ash ley 4 1 kn cw” bf : 
; (viretappiiig’that allegedly- 
• went on ii;f Austin. during, the 
p pepar a l i on to f • d 6 ss i e r s o h c i 
t\; official s’.,, k . ; . , 

iiave" seeii/lhe so-calied f 
.dossiers, VwhichV, consisted^ of I 
kfeinpy information thal'.ea-! 

si Iv coiild have been obtaihedi 
. . f i;p nV , ne.w s p ap e r'c i ipp iiigsl 
a nd con vers, a li on s, wi Lh : ' people 1 
thrbugfiou t .Austin ^including ! 
m DENIALrTagrJS . 

Conti mi ed from Page 1A 
the city officials themselves,” 
Todd said. 

*’*Of all the allegations 
made by Mr. Ashley against 
Southwestern Bell, probably 
none shakes the faith of our 
easterners and Die general 
public more than his wire- 
tapping charges,” Todd said. 

“Telecommunications ser- 
vice is the only thing ‘we sell 
and Mr. Ashley* is trying to 
undermine it in his campaign 
to avenge us for his dismissal 
from, the company,” he said. 

“Mr. Ashley threatened 
when he was dismissed to 
embarrass the company and 
he knows he can generate 
.sensational headlines with his 
accusations,” Todd said. 


“He doesn’t have to prove 
anything until he gets into 
court, When he does get into 
court, if he proves any wire- 
tapping took place and iden- 
tifies anyone who did such, 
there, will be dismissals,” 
Todd said. 

“But 1 don’t think he is .go- 
ing to be able to substantiate 
anv of his charges.,” Todd 

aflHW T "* . ■ 

-Todd said with 70,000 
employes and billions 
ductor feet of cable and tons 
of switching equipment scat- 
tered over five stales, “no 
telephone company executive' 
in his or her right mind would 
stale flatly that nobody has 
ever. .listened in on a line.” 

He added Bell employes 
•know -that wiretapping is a* 
serious offense for which they 
could be. fired . . and 
imprisoned, \ 


•Todd also said any wiretap- 
ping as widespread as Ashley 
alle£ed\vould have been un- 
covered long ago “simply 
because of •■inevitable, 
•exchange of information.” 

• Because of employe turn- 
over, if wiretapping, was 
“routine” someone would 
have “blown the whistle” 
after having. retired of after 
having left the company for 
e m p 1 o y in e n l el s e w here,” 
Todd said; . ‘ >■ ^ : 

“ Wh y w o u 1 d we r u iri .the 
only thing we sell by destroy-' 
ing or undermining its 
privacy? Does it make 
sense?” Todd asked! •*. • 

(Mount Clipping in Space Below) 

’•? V&nVAusfcin reporter, two'' 
^Southwestern Bell Telephone , 
;? Co‘. ^employes .and ,a former 
dBell- employe appeared before 
:fa . .'federal ;grand;^ ury" } here • 

//"The tip r hoy * s, : of fie e.^, 

!declinesHO;iay what tlie panel *j 
HS’probingrbut.:sources say 4 it "| 
;is .apparent/the/grand ; jury; is: ' 
booking .into ?'allege<f Bell ' 

Jacti viti^-^*||V ; 

£ ste'df jBel 1 • exe c u tiv.e.^ 

•James* TH^.tAshley .appeared 
•beforeThe gland jury as did 
/and ‘Mike CoxV' • ^ • * ^ ^ 

. Holman, now 'of/Vtctoria^l 
has 'served as Bell ? s manager? 
in Austin. -Wilkinson is. with ‘ 
Bell/s^public ^affairs .depart/* 
hneni with .duties asia/regis/? 

• Cox is an Austih^Amer-v; 
ica iv Stale man. reporter .and 1 ?/ 
apparently appeared before?;' 
th e: pan el to discuss; articles?’, 
•he has written ;ori Beil'i^Aus^ 

, Lin . actiyi t iesV ’;V $$ •/?*/'. r s[4 
'• ^V spokesman; in /the -U;Sv‘ ; , 
Attorney’s;, office said ;a .date 
'lias not ’been , set for. re-cog ^ j 
venirig the- grand jury. ■ ‘ * *’*1 

(Indicate page, name of 
newspaper, city and state.) . 

PAGE 14 A 




Date: 1 - 29-75 





Character: * 

Classification : 

Submitting Office: SAN ANTONIO 

[ | Being Investigated 



i JAN 3 01975 

1 "IT J 1 J » A JL 


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' ' '? 5 

(Mount Clipping in Space Below) 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1-24“ 7 5 
Edition MORNING 




, By M IKE COX 1 i 

TpaWlftVRRY BeSAVV..-' 1 
.. '*■- tf ;’Staff Writers ^ ' 5 

Copyright, 1975 

; ; .Hie Austin ... . 

\ AmericaibStatesmanf^ 
Austin'Mayor Roy Biitierand ; 
three : former city counciimen H 
'received ''corporate campaign’ 
contributions from a * 'slush' 
fund 1 ’ 1 - maintained by :the* late 7 
T.G/ Gravitt, ;a former - Austin : . 
Jd;i y i slid n v m a n a g erV.’fo r 
Sou tft western Bell’ .Telephone ' 
}C Q. Oa;j leges, i n , , a ; . s w or n : 
id epositionl J . ( . 1 

? The/ ; ;former manager, Bill. 

Holman, also said he used his' 
position as a^TTOHTOfs/df the 
Capitaf National Bank'board of 
directors to obtain financial 
. information about a citycouncii 
‘candidate. ;»’■ Vis 

*-■ , *,f ■'». hi’ . W 

>> • ;G ra vi 1 1; 1 who ’ committed 
'smcide "in Dallas last . ’October, 
was head of Texas operations' 
for. .the telephone company? His 
death and the Tiring ' of * BelP 
[ executive.^ ames H. Ashley, has' 

' touched, off a flurry' of '.charges 
and countercharges . of alleged 
‘illegal 1 ,-jpplilical'.; contributions,, 
influence: . peddling, r ate.:. case 
fra.ud;and_ sexual- promiscuity. 

C o r p o r a t e^ij pmd i::t tlqia -ji 
contributions are) proliibitedtfe^ 
state law. 

Holman, h o weyer) ;,.sa i d ■? the; 
-council candidates thought The; t 
. 'money , was coming,'^ 

^person ally,! not J; ttie))tel epKon&l 
company. , . ;?:* 

Tlie A me rica n-S fates ma n \h"as ; 
examined ; thej. .20b-plu s-pagd;-, 
deposit ion'^and; ob taihed; 

' excerpts ')fro^ 

.which was : g,i^by;^p^0m 
: S a n ; A n to n if , 
■ connection with.a; $29.'2 : millioh 
libel , and slander - suitjrfile dl 
against Southwestern . rieliT^pji 

! ^ 


Classification N 

Submitting Office: * SAN ANTONI ( 

1 j Being Investigated 

SEARCHED , . iNnnrrn /_ J 

E : tRlAL|7 r oi'iri.-.., r ’ 1 rn CL-C 1 

do-N 3013.75 

FBI - 

• the:fflrviv brs:6RGravitt 5 and^ by; 

} .Ashley. • • (■ ^ jT; A V’’- ;* _ 
‘ . '.Ih;the;;depositipn' :has, J 
not .yet 'been, entered \as;,part ;pf t , ’ 
I the :fecor d : i n vthe ;* suit^Hbj m an • 

; repeats \jandT&^ , 

‘ .^veral^aliejgations^ma^j^ ■ 
;tratn;s : c^1 >; pjt ' oTp^'t^edf’’ 
cohyersatipn Tbetweeh -himse) f : 
< and Ashley? last October.. . 

^Following; is :ari. excerpt 'from,: 
Ipa ges;?‘t27. ■ ;:ahtfv 1 2^ 
deposition ; s ; v ' V & t * % * •? * - 

: Alto rn ey. Pat /Maloney $who • 
a^presents^ ‘ How.rnuch . 
qasb 'HVd Ann ; g j ve in;d9B -Uo , * 
..poii tica 1; can d i d a tes ? ' Vy>.\ ■ 

. ’ , : H o 1 m an f-; ,, If?‘:rn y . memory ; 
?serves me,^00^.: v v*V.V; ■*. \\ 
*' ’'Maloney: ' , ‘\Vho,did you;;give 
; the $300 to in V''- > 

Holman : ‘Thbb’maypr (sic) *' 
. raceliii ‘Austin?^ tK'/T 

'Maloney ‘Who didyou-give it'. 

tn^'V •• T*- 1 **' ‘V. •V , »? I ‘ 
LU ‘ i "iff ^ j vAvi^ • ■ - y< ■ 

Holman: : ‘ ‘Yot/ ; Tneah : ; r what 
specific. individual?’’ .* 

'Maloney : ' ‘The : name‘s of -the 
individual! 'The, ' mayor? s' race 
means nothing'tb me^ 
.^Holman :; ,u T;believe it-was Bill 
ifoimgblood^^p^ ^;.?: / 
: Maloney.: ‘ -Did', you ;giyed‘t; to 

^Holman : j|< yes: 1 ’ > - ' ' 

C M a 1 oriey : ; “ Why ... did you !gi r ve 
himcash and.not a check?’’ ;? t^r 
Holman iI;am:not.sureitw as 
cash'. 11 amusing the conrioutiorf' 
of cash :and checks bs? tHeWamf' 


: I? amr? hot i.'sure.-.vih Hhat ; . 

” .^rticuiar; instance )it : ‘Wai.mll; 

- Two. nines, ,'later in Mt-he, 


Two- dines .Hater in 
" deposition,' Maloney, asked r 
' .1 ! Di d -you ■ re.capture.the m on ey 

Hoimanr “Yes:” 

* ■ At jone* point imtheMdejDqsitio^ 
‘ 'M a I on ey i casked yHolman Tali 
„ Gravitt Ttbldjhim : : ?*? about|tHe^ 
politico 1 ;S lush : fund • 
v ?Holman 4 1 lie;, told jmenhatljie? 

had Ta.llttlef fund ahbtthaftiFhadi 


£ to; gb,a;|pngWays ^ypujkno 

-no. rfffi i r-,-’ 

;; Maloney :‘v 14 ‘.\Vha t .jdid^he ’Hell- 

T: ; Holrhan^JHe ,?sai^®ill, 1 #. 
■> l mow:that;y ou:kn oW. thatThave If 
i; tnmKjie calieddt;'a; : kitty.^ 
-but tcari ;t h ejp you to ; the ex tenti 
-dial; you need^help,’ ?but\he?did; 
he) p ou t j n •the;^{|mtidn:^^JM 

:V ^MaibneytVl' .‘How ?did-ihe help 

m Its J: : 

;you out?- $ r 

^-Holmank; He^gave tme^somef 

c an d i d at e s;YHpo un c i lm e ni 


Holman i^Gbod ^friends l, wHo| 

^ are now-ex^friendstJV.^^'t'jri W 

* K: j- v- : If z%m 

Bell .‘attorney . Jack -^Hebdorg 

t hen • .’'asked: ;What*yyea^ 

con tribu t i on s were made?;iV|’i^l| 

• . * * :y\: 'Viv- *' 

.■Holman ’continued’: ;“rl973; Dor^’ . 

( sic) ; .Loye^^Mayp^pm 
Berl HandcbxT'city 'couhci Imanf?! 

.In y a 11 Holman;. :s aid, 

| contributed' 'afiiut' $^ 06 ?tb^flS;ji|: 

i ;the . candid a tes ! The :money Th e) 

i- . .. *. ■ & , ■ r. • • % . *. 

i said, * came* m some ; instances^ 


Jjiiisiiy o| paieuop oi|; iCaiioui aqi jo laed 

^|p » A I »D 34 3 !J 34 3 l| Ai III OJjS{|3J U C Ul JO |j 

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- naaxa [jag pajsrio aoj sXaujoiic oj 3 ab 9 
unuqoH ipgiaaSeuBiy uoisjaiq; [J 3 Q U 43 
-)SDMij]nog uijsny jamjoj uoijsodap 3 qi 

JO aSed auo SI siqx — XdiadSNlVai 

' 9 «I<M»A«. 13 *Jr *«03 ,i$ »(*>*«/ 1 ]TM 4 ( 1 V «4 
* , «mxtio*JW xwnoa 

*’ * “'; , *3nV ‘S 31VI00SSV V 3«00W 'fHVmttt' 1 

> ' ,£B 3 ^p;ptJB 0 -itww.tod.. 

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• U3Aa„ x saou^^cuf acoe u*p T£ SSL — sa* 

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TO Aemsv'Aruo 

' * II ? 2 

. V 81 

" ® ': 9 t 

. V 51 

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?rM*& ?a 

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' ‘Xi: .•’•• . ■'«■- - 

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f ^ */v \ /?’. ■;/■. .^ 0 .. ; ■' •. 

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V • e 

b I 


jjFrom Page One) 

ftSm Gravitt, in other instances 
fmrri expense vouchers, 

' kAsked in the deposition how he 
4fowed expense on the 
vouchers, he said it “was 
probably travel expense ...” 
^Frprn page 122 of the 

;3ffolman: "But ’I want you to 
ilwderstand that- Mr. Ashley 
foew what he 1 was. signing when 
lte*igned'it/He knew about it.” 
^Maloney,: V Because you;, told 

*3Holman: "Yes — well, in 
same cases I even went to him," 
TM aloney; “Are you 
Suggesting that this knowledge; 
' w gslimited uyMr, Ashley?" 

am notsuggesting 
anything. I was the one asking 
f br the money, you understand’ 
Mr. Gravitt wasn’t coming to 
me to try to bestow $300 upon 
me. I was the one that was 
hurting, 1 was the one that was 
having .the pressure on. me in 
£iistin, Texas, for political 

^Iso in the deposition, Holman 
tcrtd of pressure on him from his 
superiors, including Ashley, to 
win Austin city council approval 
ofca- rate increase from 1971 
through 1973. 

"Tlolman said dossiers ' were 
kept! on. city •councilmen ; ; to 
provide information that could 
tfel useful in influencing their 
v^te'on the Austin rate case. 

JVsked how the information for 
the dossiers was collected, 
Holman ' replied: "Data from 
tranks, from friends, from many 

. Jlolman said he obtained 
financial information, 
concerning one council 
candidate while he was serving 
da! the board of directors of 
Capital National Bank. He did 
not name the candidate. 
^IMaloney.asked Holman why: .• 
-■M wanted to know more about 
hi m/’ Holma n answered. . \ 

-When queried on how he got 

information from Capital 
National Bank on the 
/candidate’s financial status, 
Holman said: “I happened to. at 
that time serve - on the loan 
committee at’ this bank, and I 
did go through some loan 
information, to see what he 

Maloney asked Holman if he 
"used that service on the board 
to get information about city 
council people?" 

Holman:- "I personally did, 

Maloney*// ".Why specifically, 
did you want to know what he 
owed?" 7 

Holman: "Mr. Maloney, l was 
trying to get a rate in Austin', 

■ Texas.". * ; • 

Capita lv'fNational President 
Dr. : Joseph :, M. -Grant' had this 
comment . Pbout -the deposition 
'passage concerning the bank: 
“What 4 Mr. Holman allegedly 
did represents a breach of faith, 
was highly unethical, 
completely unsanctioned and 
. without ourknowledge." 

Grant , said if the bank had 
known of the. alleged action by 
Holman, he would' have' been 

• i. •.«/ • 

asked:’ ’to resign.immediately." 

Holman did resign from, the 
.25-member 'bank /board "last 
April 1, whep he was removed 
from his position • as division 
manager; Here and placed on 
•"special assignment" with the 
telephone company: 

According, to the bank 
president, Holman’s 
replacement as division 
manager, Gray Bryant', is, now a 
member of the bank's board. 

Thursday night, Bryant said, 
“The bank would never 
condone" what Holman alleged 
in the deposit ion., r 

Bryant also denied the 
existance of a political "slush 
fund." .. ; 

"There is no-slush fund,” he 
said! "There has never been a 
. slush fund.- J3ill Holman's 
contributions 'were rendered as 
personal contributio ns." 

The division mariager said tfie 

, Last Friday,/ the,' day after V-willingly ' wW’haLTve dohej^ 
Holman’s deposition; was-taken*^' Holman said.;. 
in San Antonib^the- .telephone | :• Regarding liis, actions whiiev^ 
company , ‘issued Va. -lengthy;! : bank director; 'he; said, 
statement saying Holman’s -one damn thing. -I took/a lookyto^ 
deposition ".cleared up the* 1, ‘see what orie damn.guy 
question of Holman’s campaign ■ They d idn ’ t knowIdidit.V ’ jT 
contribution to the mayor." * ... , In his deppsition,.Holman.sai r d'-| 
The statement made no \ hewould /not -have tolcl. Ashieyl' 
mention of Holman’s testimony ^ fthe ; tli ipgs he’ Vd ' ^uirin^^ thei^ 
concerning "slush funds" or his! ^ tape <rrcordedfo^ 

_ . . * _ : rnoUi A.V- «■* u i 

The i 

— it was 

campaign*, expenses," vTh ".questipning^by ./Malonejp 
•Youngblood said “ 

He said, Thursday . i _ 

Holman had* assured him the ,Ma\l-p;n^ 
money was from his Hnrino , '>.iynnr/ 

not from 

He had been subpoenaed to San t a liar?"*': 

Antonio to give a deposition ’.in • Maloney: "No^sir, nb,sir; l ;Mi|| 
connection with his former - Holman. 


■ £ 3 ? 

(Mount Clipping in Space Below) 


ST. LOUIS — James H. Ashley says his ' 
attorneys will take oral depositions from 14 . 
Southwestern Bell executives Thursday 
and Friday. 

Ashley is a former Bell executive who has accused the;. 
company of requiring coni ribut ions to a poliiical slush fund. 

Ashley, co-plaintiff in a $29 million libel and damage suit* 
against Southwestern Bell, said.his attorneys had subpoenaed' 
the 14 officers, including Zahe E. Barnes, president and chief 
executive officer of the company. 

A Bel) spokesman con finned .that the executives would give 
their depositions, but said the.individuais would not agree to 
allow the news media to attend the session. Ashley had said 
earlier he and his attorney, Pat Maloney of San Antonio. Tex., 
would agree to such an arrangement. 

Ashley’s libel suit against Southwestern Bell was filed after 
liis dismissal late in October from his post as the firm's* 
commercial manager in San Antonin and after the suicide of. 
another top telephone official in Texas: 

Ashley, who is a former general staff manager of the. St. ‘ 
Louis area, said last month that when employed in St. Louis in- 
1970 he was one of 40 St. Louis-based Bell executives who' 1 
were required to make monthly contributions for political 
purposes.or risk losing their jobs. *' 

Bell spokesmen have denied the allegations, as well as- 
denying other .charges by Ashley .involving rate-making 

Ashley testified Tuesday in San Antonio before a federal' 
grand jury looking into t he situation. 

jj He was' discharged from Bell in an internal investi gation. > 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1— ’30"*75 







Classification : 

Submitting Office: SAN ANTONIO 

1 1 Being Investigated 

(Mount Clipping in Spoce Below) 


The Securities and Exchange Commission has su%0enaed 
Southwestern Bell Telephone Co. executives,, including three fromll 
San Ant onio, to testify before its investigators. 

*“ testimony 

Tuesday;,* Ashley testified ^ 
before a -federal grand jury ';, 
here. Two -Bell 'executives^ Iso '* 
appeared. ' * * v 

The federal grand ju ry was ; 
dismissed. No date was -s.eL 
for the jurors to resume their , 

, Maloney, meanwhile, is. in 
. St. Louis- where he is taking ; 
statements from some 1 40 
exec u U ves 4 i n conn ec lion wvi t h 
the -Ashley-Graviit suit. 

Those subpoenaed include 
C. L. Todd,. vice president and 
general manager of the San 
Antonio division; Porter 
Mitchell, general staff 
manager here; and Mrs. 
Flossie Reynolds, commer*' 
cial service observing super- 
visor in San Antonio. 

Also subpoenaed frere Bert 
Lloyd, lobbyist in Sail An- 
tonio; and Louis H. Sommers, 
Waco district manager. 

Mitchell tentatively is 
scheduled to testify in Fort 
Worth Thursday. Todd is. 
slated for leslimonv on Feb. 
H. * ‘ . 

Damage sulT”—’ 

■ Ashley .and the family of T, 
O/ Gra v i tt , head of Bell’s* 
Texas operations who com- 
mitted suicide last Oct. 17. 
last November filed a $29 
million damage suit against 
Southwestern Boll. 

The SEC probers began 
investigating Bell after the 
firm amended its SEC regis- 
tration statement and after 2 
allegations were made in the 
damage suit. 

It will be the time Bell 

.lames H. Ashley, dis- 
missed general commercial 
manager in San Antonio, also 
will testify' before the SEC ! 
ijivestigaJ ors. Pal Maloney. ! 
ms attorney said. " r " 

executives have been sub- 
poenaed to testify before the 
SEC. Some former employes’ 
reportedly already have tes- 
tTTiecT * ’ - 

(Indicate page, name of 
newspaper, city and state.) 





Date: 1 - 30-75 

Au thar: 



Character: ' 

or P 

Classifica tion : 

Submitting OfficerSAN ANTONIO 

PI Bei ng Investigated 

Ai.: *•'» w 

■' f' M O 1 1 Q 7 y * i 

. 1/24/75 

Transmit the following in : 1 

(Type in plaintext or code ) 





FROM: CHARLOTTE (56-340) (P) 







Re Charlotte teletype to Bureau, 1/23/75. 

The information set forth hereinafter was obtained 
from news, articles except. where otherwise indicated. 

Subject, JOHN J. RYAN, was employed by Southern Bell 
Telephone and Telegraph Company (SB) for 27 years and since 
1964 to mid-1973 was Vice President and General Manager of 
Southern Bell (a subsidiary of American Telephone and 
Telegraph Company) ' operations in North Carolina based at 
Charlotte, N. C. 

7 b6 


2 - Bureau 

3 - Atlanta 

1 - Dallas (Info) 

2 - Jacksonville 

fl)- San Antonio (Info) 

4 - Charlotte 





Special Agent in Charge 

a U. S. GOVERNMENT PRINTING OFFICE : 1960 O - 348-000 (11) 

FD-36 (Rev. 5-22-G A) 

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( Type in plaintext or code) 

( Priority ) 

CE 56-340 

Beginning 1/15/75 and continually since Charlotte 
newspapers have carried numerous articles showing reporter 
interviews with RYAN and related information obtained. Also 
statements and information from Southern Bell representatives 
have been published as well as from information developed by 
reporters otherwise. 

Subject RYAN on 1/20/75 declined interview with FBI 
Agents and with SBI Agents after being advised of his rights. 

RYAN contends he was improperly terminated from his 
$64j000 a year position with Southern Bell in mid- 1973 and 
indicates he intends suing Southern Bell f or S12 million. 


RYAN contends in news articles that as part of his 
duties he operated what he termed an illegal political slush 
fund for nine years which was utilized to channel funds to 
candidates of both political parties. These funds were obtained 
from Southern Bell executives. RYAN mentioned eight of his 
top executives, not named, and stated that the company executives 
were given other than normal raises in salary for the purpose 
of the executives kicking back a part of the raise amount to 
the political slush fund. RYAN also set out that he personally 
borrowed funds used for the slush fund and that he had not 
been re- paid all of such funds. RYAN, in news articles, mentions 
contributions in 1972 totalled $38,000. Unnamed company sources 
indicated the fund may have amounted to $85,000. Most 
contributions appeared to have been made to state candidate 
parties, to gubernatorial candidates; It being noted the 
North Carolina Governor appoints Utility Commissioners that 


Special Agent in Charge 

.M Per 


FD-36 (Rev, 5-22*04) 

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F B I 


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CE 56-340 



approve utility rate increase. Contributions alleged were made 
to the campaign of U. S, Senator JESSE HELMS , N. C., U. S, 
Congressman JAMES MARTIN, N. C. and U. S. Senatorial candidate 
NICK GALIFIANAKIS who was defeated. 

News items set out that I I > 

[ admitted 

knowledge of the political funds but denied he kept the funds 
in a box in his desk as RYAN alleged. 

News art icles quoted RYA N as statins fchatf 

the amounts of the executive raises and how trv 
kicked back to the political fund. RYAN said^ 
tell him whenever he gave a kick back raise vj‘. 
separate from normal raises. 

-b wnn 1 

j decided 

liich was 




RYAN stated decisions as to candidates to rec eive 
contributions were made bv PVAN and nr>1 i hi cal adld-Sn rS-J J 

RYaN stated contributions were made 
onxy roil owing request on behalf of candidates. 

Southern Be ll on 1/22/75 released statement of 
at Charlotte and Atlanta, Ga. , which 

set out that RYAN was forced to retire June, 1973, foie to 
poor ma nagement perform ance: that in January. 1972. 

the matter and| 
managerial shorr.cnrmnJs bn 

on 7/27/72 1 

N. C., (not Greensboro as RYAN had stated) and made 


counselled with RYAN about his 

t no improvements were made; that 
Jmet with RYAN at Winston-Salem, 



Sent . 



Special Agent in Charge 

* U. S, COVEnNMENT PRtNTINC OFFICE j I960 O - 346-000 (il) 

FD-36 (Rev. 5-22-64) 

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F B I 

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CE 56-340 

recommendations for RYAN’s improvements but at this time 
RYAN seemed to have an almost obsessive desire to be closely 
associated with the Governor at which time RYAN was told 
to spend more time on company business and less time on 
civic and po litical activitie s: and that at another meeting 
on 3/6/73 of l I with RYAN, RYAN was told he 

was being placed on probation because of lack of performance 
improvements. The Southern Bell statement further set out 
that on 6/18/73. beca use of numerous incidents of poor judgme nt 
on the p art of RYAN, 1 

i me t w ith RYAN at Charlotte for an indepth re- interview 
and confronted R YAN with the areas of co ncern. , After a 
full discussion. ! [ remained in Charlotte 

for three days to interview each of RYAN’s staff membe rs and 
some other key mana gement people. On Friday, 6/22/73. 1 1 

I ] met with RYAN three hours discussing the 

findings of mis -management and concluded that RYAN’s active 
employment must be terminated. RYAN signed a request for 
Retirement on a Service Pension (reported as $26,000 annually) 
effective 9/1/73. Thereafter RYAN was given $25,000 in 
10/73 and $50,000 in 11/73 in severance pay and RYAN signed 
a release of the company from further liability for any claims. 

The Southern Bell statement further set out that 
in 6/73, Southern Bell representatives discovered bogus company 
expense Vouchers which totalled probably $40,000, the proceeds 
of which may have been diverted to political contributions. 

This activity was stopped, and alleged an audit of this matter 
is still underway. 

The news articles appeared to indicate that the political 
contributions method of procedure was changed in 1973 shortly 
after RYAN's termination. Prior to this change, according to 
the statement, it was felt the procedure was in compliance 


.M Per 

Special Agent in Charge 

U, S. GOVERNMENT PRINTING OFFICE : 1088 O - 346-000 <11) 

FD-36 {Rev. 5-22 ? 64) 

F B I 




^.Transmit the following in - : 1 

(Type in plaintext or code ) 

Via I • _____ 

CE 56-340 ! 

with State and Federal Laws. The article sets out that the 
company has a plan in existence currently to encourage top 
managers to volunteer contributions to the political process. 

In simple terms as indicated as being a savings account to which 
the executives can authorize payroll deductions to accumulate 
for the employee's personal account with any disbursement made 
to the employee only. The custodian of the fund is not permitted 
to disclose to anyone the names of those participating or any 
information about the accounts. The disposition of the fund 
is the employee's business. Other news article indicates this 
to be non-interest accounts. 

In news articles, RYAN contends that although he 
allegedly was terminated for management shortcomings, he was 
given an $11,000 annual salary increase about the end of 
1972 during period Southern Bell indicated poor, performance. 
Southern Bell explained this act as something in the line of 
position of re-allocation, 

RYAN in 9/74 according to news articles, filed a 
complaint regarding his termination with the Equal Employment 
Opportunity Commission claiming that his dismissal was partly 
from vigorous enforcement of a federal consent decree between 
Southern Bell and EEOC requiring Southern Bell to hire more 
women for higher managerial positions. 

News accounts set out that RYAN had difficulty obtainir| 
counselor and was silent for approximately the past 17 months 
because he was afraid he could not win a law suit against the 
nation's largest corporation. Also reportedly RYAN's approach 
partly attributed to personal matters, RYAN having a son 
seriously injured in a motorcycle accident about the time of his 
dismissal ^ ind reportedly RYAN and 

] Further news stories anuaea no a possioie arrair 

between RYAN and a female, employee reportedly promoted unus ually 
fast. Recent news articles show RYAN has retained Attorney ! 



M Per 

Special Agent in Charge 

<r a S. GOVERNMENT PRINTING OFFICE ; 1009 O * 340-000 (11) 

PD-36 (Rev* 5*22-64) 

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CE 56-340 

reportedly Lias instructed RYAN mUTTS discuss tne mutter wrrrr 
investigators at this time. 

Recently installed North Carolina Attorney General 
RUFUS EDMISTEN, according to news articles, will have his 
office conduct an investigation concerning the matter. This 
investigation is to be headed by JEAN BENOY, a male Attorney 
on his staff, who is reportedly highly knowledgeable on 
utilities operations. 

Another factor that reportedly ^ inf luenced RYAN to 
open up in this matter was that an acquaintance T. 0. GAVITT 
former Vice-President and General Manager of Texas Bell 
operations, Dallas, Texas, reportedly committed suicide 10/73 
and left memos and letters charging the company with hounding 
him to death with secret and internal investigations. The 

|ot southwestern Bell 

Telephone Company, San Antonio, Texas, filed a 29.2 million 
dollar lawsuit against Southwestern Bell Telephone Company 
charging character assassination. RYAN felt his position was 
similar to that Texas situation. 

RYAN responded to a Securities and Exchange Commission 
subpoena and was interviewed for several hours 1/18-19/75 at 
Ft. Worth, Texas, by ROBERT F. WATSON and others of the SEC, 

Ft. Worth, Texas, Office. 

USA KEITH S. SNYDER, Western District of North 
Carolina, Asheville, North Carolina, after having discussed 
this matter with THOMAS- J. McTIERMAN, Chief Fraud Section, 
Criminal Division, United States Department of Justice, who 
desired investigation be conducted, advised Charlotte FBI of 
investigation request which has been approved by the Bureau. 




.M Per 

6 U. S. GOVERNMENT PRINTING OFFICE : 1090 O - 340-090 (11) 

Special Agent in Charge 

-FD-36 CRev. $-22-64) 

' *b6 

F B I 


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CE 56-340 



In view of the matter of the investigation and the 
numerous allegations as set forth hereinbefore, individuals 
interviewed who may be involved should be advised of their rights 
as potential subjects. 

Investigation should be expedited as USA SYNDER 
indicates that at the end of the current court term at Asheville, 
N. C., 2/14/75, consideration will be given to calling a 
Federal Grand Jury for possible inquiry and he desires Bureau 
investigation prior to such action. 

USA SNYDER requested that in addition to the 
specific leads set out, the Office conducting investigation 
should follow all logical leads in this matter. Copies of 
appropriate newspaper articles contain background and any 
subsequently obtained relative, information will be forwarded 
appropriate offices. 




Will inte rvi ew 

for any knowledge of tlie setting up and operation and maintenance 
of any political slush fund and if such a fund is admitted, 
ascertain complete details pertaining thereto and including 
manner and source of funds obtained, details of the handling 
of the funds and contributions to candidates, particularly to 
federal candidates. 

Will determine if 
ind icated in South ern Bell 

attended a meeting as 
'statement in the summer of 1972 

_and subject RYAN and ascertain the place 

and reason for the meeting and all details which may relate 




M Per 

Special Agent in Charge 

A U. S. GOVERNMENT HUNTING OFFICE : 1009 O - 340-000 (11) 

.FD t 36 /.Rev. 5-22-04) 

F B I 


transmit the following in 

(Type in plaintext or code) 



( Priority ) 



CE 56-340 

in any manner to operation of a political slush fund or 
similar contributions, noting information about such matter 
was included in Southern Bell's statement. 

• Will, through I I obtain complete information 

pertaining to Southern Bell ' s discoveries in 6/73 of the 
preparation and payment of bogus vouchers prior to that 
time the proceeds which may have been diverted to political 
contributions . 

Will determine the amounts (reported to be $40,000) 
and information as to person and/or persons responsible and 
why the matter was not brought to the attention of proper 
authorities. It is noted that failure to report under certain 
circumstances might constitute a misprison felony violation 
of Title 18, USG, Section 4. 

Will obtain copies of the audit conducted concerning 
the bogus expense vouchers. 

W ill int e rvi ed 

IS out 



above . 


App ropriately interview 


to determine the officials or. executives of 

Southern Bell’s Charlotte Office during the period of 1970 and 
1973 when RYAN left the company for identities and positions 
of RYAN's top aide executives from whom RYAN indicated he collect 
money from for the political slush fund during this period. 

Will determine :.the pay raises given each of these 
top executives during this period, including amount and reason 
for the raise and ascertain what part of this pay raise, if any, 
had indicated the recipient should contribute to a 




. M Per 

Special Agent in Charge 

* U. S. GOVERNMENT PRINTING OFFICE : 10U9 O - 3*i-0l>0 (II) 

FD*3G (Rev. 5-22-64) 

F B I 


Transmit the following in 

(Type in plaintext or code) 


CE 56-340 

company political slush fund as alleged by RYAN. 



Will obtain from 

any further information he ' 

may have, noting he did the investigation at Charlotte, N. C. , 
that resulted in RYAN's termination, that may have a bearing 
on RYAN’s alleged slush fund. 




Will contact and interview! 

l who reportedly retired in 1971 as 

who according to Press 
articles allegedly confirmed that he knew of such a political 
slush fund but claimed he did not maintain this fund i n his 
desk as RYAN alleged, to determine any facts in details 

^ - ♦ _ Zj • jz. l _ i t , . • n 

can provide regarding any such funds and full details regarding 
sources of the fund, how it was handled and candidate recipients 
of the fund, particularly federal candidates. 



Will locate and interview] 

Southern Bell lobbyists, to determine any knowledge 

of a Southern Bell slush fund or political slush fund as alleged 
by RYAN obtaining complete details of any knowledge. 

Will specifically interview these individuals for 
information as alleged by RYAN that they as political advisors 
had helped decide candidates to whom funds were to be 



M Per 

Special Agent in Charge 

6 U. S. GOVERNMENT PRINTING OFFICE : 1066 O - 346-000 (11) 

FD-36 03*?v, 5-22r64) 

Transmit the following in 





■, Date: 

(Type in plaintext or code ) 





CE 56-340 

It is noted that both have denied any knowledge 
according to the press. 


Will again attempt to interview subject, JOHN J. 

RYAN, 3720- J Park Road, telephone 525-6096, for complete 
details of the reported slush fund operation as well as details 
pertaining to any other violations of the Federal Election Laws 
of which he may have knowledge. 

It is noted that RYAN has indicated to N. C. State 
Bureau of Investigation Agents that he might re-consider and 
submit to an interview. 




M Per 

Special Agent in Charge 

ft U. S. GOVERNMENT PRINTING OFFICE : t L*C0 O - 340-000 (11) 

(Mount Clipping in Space Below) 


Rate increases in 
the Bell System were 
under attack in two 
states Thursday. . 

The State of Texas 
prepared to go to court, 
in an attempt to keep 
Southwestern Bell from, 
increasing its long-dis-! 
tance rates'in the state. 

In North Carolina, the 
Utilities Commission 
postponed hearings on a 
$62.4 million rate hike 
requested by Southern 

The North'Carolina body 
wants a “complete and 
thorough independent audit” 
of the company. 


The commission said the ac- , 
tion, which could delay 
consideration of Southern 
.Bell’s rate hike several 
months, was necessary 
because recent statements by 
company officials have raised 
“serious and substantial 
questions" regarding the 
“accuracy and correctness” 
of Southern Bell’s records on 
which the rate application 
was bused" » — 

, Xfafi commissio n's Action 5 : 
followed a statement ‘by L. E.-- 
, Rast of Atlanta, Southern Bells 
president. Rast said the com-.’ 
pany discovered “bogus vou - 1 
chers” for approximately; 
$40,000 and the proceeds of^ 
these vouchers “may ■ ha vet 
been diverted to political : 
contributions.” j 

R a st’s statement was. 

■ prompted by statements from 
John J: Rvan of Charlotte , for- j 
mer Bell general manager in ; 
North Carolina, who claimed 
that when he worked for Bell*; 
he maintained a political siusfU 
fund from which contributions v 
were made to political candi-'o 
dates. • * , v 

Texas action 


. Only hours after Soulhwes*:| 
Jern Bell announced its;.*; 
proposed rate increases',’! 
Texas" Ally. Gen Jolin tii'fQ 
said in Austin that he would 'i. 
go to a state district court to| 
seek a temporary restraining^ 
order to block the increases. 4 

Hill said he “strongly sus-;j 
peels’ ’ that the proposed rate V; 
^ hikes are “partially based on ; 
. their (Bell’s) financial diffi- 5 
acuities” arising from Bell’s 1 
^difficulty in getting approval 
Tor rate increases in several, J 
;Texas cities. The refusal to.'J 
"approve the rates apparently 1 
’•stems .in part from the * 
"publicity received by Bell in. 
^.connection with a $29 niilli* 
fsuil filed against it and 
.allegations that the company, 
•was engaged in unfair rate- 
Isetting practices. 

Texas does not have a state 
-commission to regu late utili- 
See BELL,"*Pagc Bf 

(Indicate page, name of 
newspaper, city and state.) 





Da.e: 1 - 31-75 








Submitting Office:3AN ANTONIO 

| j Being Investigated 

b- to- 1 f o -3? 

I - *• AiOO _ .. itzffi' Jffptxpo. , __ 1 

j - Liutil ;j ft y-5 > 1PT | 

! I* i U 3 j W / h j 

(Mount Clipping in Space Below) 


iCITy- ^A-Jmysterious 
f^D^jgp^suegesangva-.imk betvyeen 
^ro^Qpaer^ekj^uti^es'df Southwes- • 
Telephone Co. and a New 
pO'Fleans^Mafia figure was issued last 
|yeafety|the U.S. Justice Department 
^stifikejforce here. 

I&'onejof^the two former Bell executives 
^nameagriO. Gravitt, committed suicide 
'^aBoutiaCrnonth after the subpoena- was is- 

pany that has done business withL-V 
^outh western Bell. Ashley anchGiaiVliTwei 1 ^ $ 
top Southwestern Bell officers?/- j/,/ 

\ Although the subpoena was Jssued last J 
September, no one has ever disclosed what 
i 'was behind it, and Ashley and- the (Gravitt > 
family as well as the firm were left worn.-*. 
I dering why the question had/been raised?./ 
[■ about a .possible Mar cello* link/i ^ 

.“We’ve.. been accused in a subpoena joF| 
1 having some kind of strangtj/c 6 nnection^ 
1 with Marcello, but our accusers -have- never £ 
j told us. why and they have never revealed^ 
j themselves,” Ashley said in an. interview?*^ 

^ .Hjs;:i?mily and James H. AslfieyT the' 
j^econdjman named, have never been told 
subpoena tried to link them to 
pfcarioSrJLittle Man) Marcello of New 
SOfl^ans,;but Ashley charged it might have 
prompted by Bell officers in an at- 
iftenhpt t^Vembarrass or scare” them in a 
rdispufbl^vvith the Southwestern Bell 

*•:; Marcello is reputed to have been the 
j ; ‘ Dixie, Mafia chieftain for a uumber of 

V.. The-subpoena sought information from 
■rfinancialirecords of a Wichita, Kan,, com- 

Gravilt’s family has charged that the,! 
document along with an intensive :*inveVi 
‘tigation into Gravitt’s personal life "bjQ 
Southwestern Bell security personnel;, hadv 
contributed to his suicide. ;«■ 

Telephone company officers [den ied:aiiy ^ 
knowledge of the origin of the subpoena. 

The document bears the name of Michael^ 

: A. DeFeo, the head of the U.S.: strike for celt 
based in Kansas City. D e F e p;’ refused ttoi; 
discuss the matter, as did Justice Depart// 
ment officials in Washington. “ ' ' * ’??:* 

-Justice Department strike forces are.' 

(Indicate page, name of 
newspaper, city and state.) 





Date: 2— 6“75 
Edition: HOME 





Submitting Office: SAN ANTONIO 

j | Being Investigate^ 

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r. f - !11 1 - - QJ 0»lSfB’-fT>* ■*« "* ""“i ,>••* '‘•r» At - C— •' 1 

p5*vm', vI r ^ ai >-3 ,: tr 5".Cd '^'•‘3 * 2;-3ia3'- 3: - 

*>ifo -ro;-. - ^-. 

p‘H P» *Xg- okCjP •' 

- Q].tP.;<7r-jT‘'fT¥0> £5 A 

1 • cr pa. *3 

J V2 : 5i a - : O -r^-V 
*YV, Qj •>•'• 3 .‘J?»*t5l‘ 0-A 


2. LCL <^ ^ «*jS»>.av 

5 ^r-^-cr-fE ; : n> -< < * '*,’v*^* "| 

0-VJ^j^iOjs* 2»0j;*n^;O feiwfe^' 

^ ; “f?-. 3^ r*^ v-w >;«?--•’ Si^ste 
i SrJ&a; it: 

r ‘ v . W associatcdVress '■ 

• ;■ •->.* . . ■ — ; 

j^MJSTIN — :-:'A' 'tempijrary i ,res- 
: 1xainin|J ord er ; was r issued Friday; 
: 5 |o;block a proposed $45 million rate 
j -jineifease 1 by Southwestern Bell on : 

state . btstrict, ■ Coujf^|ul^^T orafj 

Blackwell sef a 'head ng f 6rJ2 ttateSfy fi i ?i8\j 
in thexase/r- * iMM® ' 

in tnexase. r 1 / j ; ■ * 

re s.trai n i ng V order" 

Sout hwesterly: .Belli: pffieiais ; W n^Daiils ll 
turned -down his offer, tptjs ubffli kjtjk ctffg 

(Indicate page, name of 
newspaper, city and state. 


Date: 2-S-75 

Edition HOME 





Classification: / 8 & 

Submitting Office: SAN ANTONIO' 

| [ Being Investigated 

* ' ()']■ , ' i* ^ fc » t. 4 ‘^i/T .fr ^ n **' • */t. 

*• ;: v '- ''‘^9 ' v :"•; '•t^4^‘;:‘^.>‘^i 

: vPa t Maloney , - a t torn ey-;f or ; '* ] 
dormer Bell executive James '. 

: HyjA s h ley- an d:>t h e .‘■-Qrh 

-iv^‘ ; ^^Gra>yt(^mij^:^aid Mding.r 

; I . v t iie^i r i ii 1 *5 i n?vM a re h'^vvy o u 1 H ’vVipti^. 

§3 ^Rtje^prematureVrMalonev :'said; ' 

J. £ Vv ; -he. . would <.be; through taking :■ : 
A-y/ A A depbsitiohscand ;;be. ready r f or ^ * 

rc'^Vi-MV. * *^Gr.een;*saia the ; .pre-trual: 
t: > afi ainste >nr oc e ed ihes% a n n o t ; b e \ c b iff- 4 

■Mav * v ;g ^’H^al'S'^^ai-d^pe rair] 
x ^v t /investigaiioris— ^ex'asiattor-ia 


,( esmte arguments* f the» * x *Li ^ *u*4 

date, -v ,.* <v ; v 

. Bell attorney Hiibert>Green;.fl * pie*suit/^ last£ J 

a p pa re n tly, «.c o rivrnc ber^by^Ashley - and* the * 

i j udge^tliajt^tlie -^Iai;^i ^24 

,\v.o u Id ; ?b ; b$ ■ ;'^p reffitftjiir j .'a‘ s | cli i ef ^ wh e n 4fi e?topk1hisSi]e§ 
Green said th a t more kinVe j^inJfiaUasjin^ 
was nee.dedto t'ake , !dispbst-‘';: IM i ±v&£t v- *’ •;!&&?> 

lions- a nd- :.t‘hat 'jfhfettr-i a -S u it ;a 1 e ??l$ 0 H ■ * 
climate .is .now- p re j u d ic i er.ii^B e U * r :qo n s p ire d , - with; 
np.iinsi B ell becau se 

tensive publicity. .," .T?' 4 .i'oE'Ashiey.and'Gravat.-..-;^ 

(Indicate page, name of 
newspaper, city and state. 



Date, 2 - 11-75 







Submitting Office: 5 AN ANTONIO 

j j Being Investigated 

- V/ 

J v " 

I SEARCHED.....-.., 



i FFBlj 



1 fCLA 


(Mount Clipping in Space Below) 

|_ “ m-— ^ 

r> ■- -v 


•K-tf.T'VV^W ■'■ -m- 
:f. V; Vcrfe .. • JVgr . 

V ,ftv- Tfl % '.- :\i^M 

,,, V, • 

*" ■. ' ,j W-/. 

} A*. f(Kleral.- jgrand 
jury probe ; of ;:Souifi§ 
v western Bell: • Te%-} 
pHone C ol^yibwetl; 

. sigHi Tuesdaiy 6K}?|- ; 

^fflffiiea^:aetMtie^: : j 

¥ ' '-Th e ' vju ry , \\ lnch two Ayeeks 
* agoshad ■ i ts * ti m etfext end e<|4Q! 
probe ;,Bell; spenUMiine houfjs j 
v T&es day :t akiag 4 e s tinl^ny 1 
'■ , from'four.^itn^e^^fi j~J; 

’■ : } 6 nevbf .the’ wit n ess e s vsjib * 
poenaed to -testify Avas Uustln 
tjo v, '.reti red Sou th’ western 
Bell vice president: 1 ^ 

7> Hoy,, of St;Louis , was'Bell ts. 

y v ice p res id eh t incnarge^bfr 
, ^public- affairs ,'foivtfhe ‘entire ■ 

: ; Sou th western -Bell ? systeiri.: ji §- 

¥ u M . beil spokesman described 
u the job of ‘'public affairs’-’ yas*. 
tl being in- charge oF:rate-m'ak- 
:. , C-ing. and , generally, meeting- 

... . legislators. and^othenpoliticaL 
^individuals.. *‘ ; rv\ t *T 

. V . -Lobbyist ¥ 

k Two weeks ;ago, -the^grand^ 
yp] nry heard from 'Bell's regis^ 
■[. lered lobbyist in -Texas/Ward. 
Wr -Wilkinson of Dallas. * . y-% 

t^p- .The U.S. Attorney’s o’ffice' 
ii: 'Phas declined to-say.whatttheC 
. acgrand jury is investigating^ 

‘ l -and who -has 5 beeny 


i t ^ . However based on the :na|, f 
f: ' litre of the jobs of Bell.execu*’ T 
S r’Tives being- .called] -it‘v would 1 
;i ! appear : the’ grand - jury is. 

/^looking- into -Beilis political! 
jgh activities. * • • P 
? The o the r w esse sVap\ 

■ . L pearingjTuesday.iand4'hosei 
$ h-schedul e d for :-;W edne s d a $i 
T; were, hp$dent ifi^ 

\ Ijlk WV1 sob ^accord in g]-;to*!p aj>bns : ' 

: j- on file -wd th, the vXJr S . D istribl 
, | .Clerk’s office !; th e',.gra rid J u ry\ 
*•; ;is also meeuFeb. : 
:Vm 1, arid A and :March;U.and 

FD-3SU IHev. /-io-oo; 

(Mount Clipping in Spoce Below) 


By ALAN BAILEY, ,.l. ; .. 

w^ A’top" Justice^Department at- 
yftorney-'has been called* into the 
|grand' jury investigation of 
^Southwestern .Bell’s' political 
, activities.. :\ : y »>:■ .-. .rr-A 

• ' In San Antonio Wednesday ’to assist local 

• .U.S. attorneys was Robert Hicky, chief of the 
election; and lobbying section of the Justice 

^•Department’s Criminal’ Fraud division; 

The U;S . Attorney’s office would.* not ’-give. 

' .exact reason for the attorney’s . visit to iSan. 
Antonio.; v ' . ' - >• ; ’• ' *. : j’ - “ > 

However, the office did confirm-Hickv’s. visit .1 
: .was related to * a* ' grand jury investigation; *; 
v which 'is apparently the Southwestern-' 

m : f , \ . ’*» v\ ■-*: ; -r.." ■■ 

c*: : : ^ 

’ .The .'federal .grand jurors. heardTive.' moreg 
- witnesses, during its nine-hour session Wed 1 ® 
"nesday and then recessed' until Feb. 24.; : - < % yf 
; Witnesses Wednesday 'declined -to. identify^ 
, t h em s ef v es an d^the U ;S ,VA t torn ey Is Vaf f ic efe 
5 refused .to name the .witnesses^ 

Tli e‘ office also > hasCiefi used ;to -say ;wii : y itheSj’ 
. grand jury is iookingan to^eriit^p® 

$ 1 However, unofficial report stinHica®^ 

"is. probing Bell’s political actio ns-and its ! ob-^ 
bying of political favors to obtaih'.;bettW .tele*if/ 
phone rates;; , :*.* 5* 

-In -an unrelated JB.ell -developmej^ 

. sociated Pfess;reported the chaifmarft^ 

' .Kansas rate-making body no^.regi^itaking|£ 
Vi a trip las t -fair to 1 Las V egas|.-*sponsoVe^ 
'Southwestern .Bell; h: 

■ V; .But Dale .Saffels , the' chairman ; ■ l^^has^ 
-4# .-present Intention of resign in g^fe:pds tfe 
. because he took -the all - ex p enses : paid trlppp^t 

(Indicate page, name of 
newspaper, city and state.) 





D^te: 2 - 13-75 

Edition: HOME 





‘ J- 

° r >1—^' S 

/ to - Cf 3 

Classification : 

Submitting Office: 


| | Being Investigated 


/ ,r- 

^ > 1 " 

| SEARC.{F r . , 

ivDt'Xt) ) 

i i.iALIZi. 

nitp/X... ' 

■} 1 ... A. *— * 

'1 j 1 

ii 1 

Mi j 

i f ct* A 



File— Serial Charge Out 

FD-5 (Rev. 6-17-70) 

c4S— 16 — 8:U7r»*'l 



Class. Case No. Last Serial 

I I Pending Q Closed 

Serial No. A Description of Seric 


- MjCL 






Date Charged 



Investigators for the Texas 
Senate Consumer Affairs 
Sqbcomrhittee will begin 
fanning^out across the state , 
during the* corning month as 
part of their'^ “spadework” 
before embarking on 
.he a rings into t h e 
Southwestern ’^11 Telephone 
Co; scandal, according to 
Mik.e . Thom a s s o n , 
subcommittee chief of staff, 

^ Thomas sonsaid a special 
investigative team'will begin , 
“fairly f , soon” f to question 
Bell executivesVand others in 
various T exas .cities while 
ait 'em p t i rig ft o ‘ fob t a i n/ 
documents of an undjsclosed 
•nature/' f f' !; ! V.'/f . •' 

. “We’re trying, to get some 
kind, of , basic ? foundation 
prepared before we start up 
any heamngs,^ he ; - said 
Thursday// \ «' y ♦ • .< 

In Dallas 1 ' meanwhile, 
attorneys’- in k ; $29-rhillion 
damage suit filed against the 
phone company are expected 
to finish taking' sworn 
statementsfrom present and 
former Bell executives by 
late Fridayr * * 

Thousands of pages of 
pre-trial . testimony already 
have been;*;, taken/"- and 
a tftrnmysf/ have indicated 

that , considerably more 
groundwork will have to fbe * 
d o n e;» /b e f o}re . t h e/ 
muchTpublicized. '--case /goes . 
before a ju^/f 
A; tnaldate of* May 12f Has 
been set/ but attorneys for f 
the j $ 0 ^ 

‘said they will filef/af 
motionPprobably f next? 
month— asking that the trial 
be moved out of San Antonio. _ 
The. lawsuit, wh ichfamon ef 
other, . things charges tHe, 
company /with maintaining^ 
pollticai/f- /siu^h . funds -and; 
unfair rate-setting practices/ 
T was filed. here Nov. 15, 1974/ 
hy/oiisted/San Antonio. Bell 
executive .James H. 'Ashley; 
; antf sumvors. of X/V'o/ 
Gravitt,. Bell’s Texas chief- 
who killed himselLa/monthi 
ear lier ‘inDallasK^ff^iv/s 
The . ^ppsitio^^uclp^' 

Da li as "c ame/ori^^ s of\ 

two . [ days// ^uiy 

of government , -attorneys . in: 
San Antonio this w^k///V; 

The 'federal jpanel^whose,; 
p a r t i ici pan {s^indiudd/^a! : 
top-rank i ng/f U ’ S. Justice 1 

Washington, went into recess 5 
Wednesday /but isf expected 
to resuriiej work Jn/the * near . 

(Mount Clipping in Space Below) 

- LUBBOCK — ‘ (UPI) were handled in accordance 
Ah official of Southwestern with the federal Election 
Bell Telephone Co. said Campaign Act. 

Thursday company “A look at the facts wilil 
executives contributea show we've done nothing': 
mtfMley to Apolitical' that would improperly^ or; 
campaigns, but all the illegally- v influence ourj 
contributions were legal regulators or legislators^ 

•were not meant to Influence * .tih no u g-h m o n : e.t<a ryl 
legislation.- 1 ? contributions,” Todd said. 

^CvL. '‘Chet- 1 Toddi 5 'Vice Todd said the idea Bell 
president and general donated- 'money improperly^ 
manager^ • of Bell ’s : San to politicians was fostered by j 
Antonio area/’ - said " the the news" media' 'which' he'; 
campaign contributions said has -been 'bia sed on /its 
' f reporting on the Bell- 


‘‘No. charge 'however iil“i 
founded- —was deemed too 
ridiculous for red headline) 
treatment : y 1177s . 

“We’ve tried to‘ respond to 
these .attacks in ethical;') 
business-like manner ..he- 
said: We’ ve,, tried to >.be: 
reasonable and:v fair.; ih) 
getting our side of the story! 
across. . f *;..■/ ; 

“But our denials, our, 
citing of factsYoand bur) 
attempts to be ^ethical just) 
don’t make the news. 

“Anyone who has been in; 
San Antonio knows -we have) 
been the object of- a 
sensational propaganda) 
attack that shows little 
pretense of. objective 
reporting from some of the! 
media,” Todd said.: > . . . ig 

Todd said this would seem 
\ to be a court matter, but had 

been ' s e n sat i on a 1 i z e d : 
because of the positions held; 
by James ; Ashley:y'C.’>'^; ; :Y'Cr^i 
“Add to the suit a list of 
charges and allegations^ 
made by the plaintiffs in 
newspapers or on TV {—and 
t he sens ational impact i s 1 
alWdSt atomic,’ ’ helSt 111. " . 


(Indicate page, name of 
newspaper, city and state.) 





Date: 2-14-75 

Edition: CITY 






Classification: ^6“1$5 7 ^ & 

Submitting Office: SAN ANTONIO 

H Being Investigated 

'\ SER ) A L \ l 

I jVYi'QmOA 

KUodu iMev, f-i 

(Mount Clipping in Space Below) 


;^9? : — State;;agencies -in Missouri and Kansas thapj 
i£t8#$%- ^W^ wes ^ e r^ /Bell Telephone Company and decide? 

v ; at:, .'T fP.^I ':1 f -,iTt QU, ;Ch iiTfrc llnirn Kainri a/ 1 U*« Jirt «1 

At^the ljsame ^ firne, trie 4 ", 
>compariy;’h a sibee ri^Toradlo ij 
■'fdefen^":,itselfj:^^^ allega-y 
' » t ip rt s t h a t i t ; co e r ce d ?m a ny 6 j v i 
’ytsVfexecuitives into con*’ 1 
Mnbutihg ‘to?a political slush 
hf uncRiri .'Missouri'. -'Bell has 
called the accusations 
inonsense. * 

■ « i 

- 'William, ft, Clark, a 
10-year member and former 
'chairman 1 of the Missouri t. 
P u blic/Ser v i c e 'Com mission; : 
resigned la,st month; 'in the*, 
face*-,. of V almost-v 'certain • 
ousterv'; ‘ Ui- 1-V 

/an w hile, two member s 1 " 
of, the Kansas .Gorj5oranT?fi 
C o m mission jli a v.e . c om e 
underfire. as a result o ['dis- 
closures that theydeceivcd 
toll-free -phone Credit cards. , 
■ fronV'SouthwesternVBell and' 
..had .been the|fco'mpany’s, 7; 
’ *gu es ts d as t ' y ea r on x a n ex- ' 
pense-paid trip that includ- 
ed a stopover in Las Vegas," 

• Nev. 11 -' . • ‘ • ‘v!* “ 

,, , *: *?- „ . j'oniJ ie^commission.for’Vearj r ^mmissiumepnc 

Clarkiresigned after- little li- “legations- ‘that 

closing that he had been a 
guest of .Southwestern Bell . 
on.;. a;.- three-day hunting trip 
i to/.Texas' in 1969. Hisjresig- 
| nation ..cameras he .was 
j preparingito participate in a 
i hearing., oh a ,$52.3; million 
,‘r.ate. increase; request Aiy. 
Bell . ; f o ivK; i ts ) • .Mis so u r i 
operation's:/. A , 


About a week ago: the 
company agreed to a ‘com- 
promise settlement calling 
fop* an increase of about.- 
0$32 : 5-million.. -• /■ 

> ’ .Thh figure was considera- 
; bjy lower than what .some . 
;‘:people believe, the company* , 
might have attained had 
/'insisted, on a fulLscale. rate; 

’ h ear i n g , : Th e y wo n d e r e d, ! 
i. whether the company would 
( have ,seltled ; at that, figure .\ 
i had it not been. plagued by 1 
; troubles on., a ; variety - of - J 
. .froRB^V, /;?; v 

Free credit • 

The free credit cards had 
-]been;<prpyide]d>t6 members 
o f;th e/ co m mi s s i o n . f o r-vears. | ' Con: 

His widow and-two-son? 
have joined James H^Ash’^ 
ley, a dismissed Bell^xecu-*?,! 
five, in a ;$29 s miIliori:ili&ei^ 
and damage suit .agairis^' 
SduthwesterriBell. Ashley?, 
was ousted from a’high-level j 
job in San Antonio.on Ocl.:25 
, amid an internal inyestiga^ 
•v-t’ion by the.comp'any>ipt6;Kl^ 

[ deged i r r egu 1 a ri t j es .? 

1 Ashley is scheduled' 
testify Thursday, before ;the? 
M is sour 4 JRu ; b lie- .S e r.yi'ce$ 
Commission^ - cone erriineFhi s 5 

/keli hood tha t- the' two Kansas 
fconim^sionhhs; Dale E. • 
; S a f f els - and! Vernon 
Stroberg;. would; be: ousted 

• f rmbriff ice '.as a -result of the 
Las' Vegas junket:,- 

k u t’-P o v . H.o be Ft F . ■ B e if-A 

jm e It; of t'K a nsas sharply’ -cri- '• 
4 i c i ze d ?S o u t h w es te r ri Bell . , 
He -said" he considered .the 
telephone company official .. 
•conduct “most unfortunate " 
and reprehensible,, regard- 
less of how- innocent their, 
motives may haveibeen. " ■- - 

• he? ri i s c i os u res a b out 
TaV ors"<exte n d ed:!by. :Sou t h^ 
^western' Bell to lrfenibers of 
the agency, responsible for i 
‘regulating- utilities rare part ; I 
of v ayse r ies; 'of deyel o pi d en ts 

, th at. Have .plagued; trie- com 
paiiy 'since' .the; suicide last/ 
Oc.lober of T. O^Gray itt "of ", 
alias;?!, vvli o? headed the: 
‘ cmripariyj s 

u n 1 a i w f u 1 1 y c H a n n el e d *co r-i* 
porate funds .to.. ,poljticajf{ 
campaigns. ^ *‘L *, } * 

FHe.fhas asserted thatfS! 
while assigned' to St. • Louis**; 
in 1970! he was one, of 'atujj 
least 40 Bell executives^ 
based in Missouri who were? 
required to contribute $50 : a'd 
|( month c fo;;-^ politic a-i? 

• candidates designated by! 
| r , the company. ^ v» ; <• * 

P ; Pay ,'hlkes 

^Ashley contends :that,^ 
/starting in . 1 968, executives): 

1 at the department' head)dr-? 
hyice/presidential' levelAvere^ 

' given .pay increases th at in-? 
eluded ( $l,000;a;year' to^co.ver) 
the alleged monthly .political^ 
’.ebntrib u t ion s Fin /effect • 

' s aid- , St h is rw as; c o rp o r- a tei‘ i 
g i vJng rdin d e)r))fche ;g ii'ise ? 

: indivi dti'a-l- -do n a ti o ns 1 . 5 M : i s# 
souri ;law prohibits corpora?? 

Texa s-yjopera ^ j , lions .froni -bontrib u tirigdxr- ?: 

: • ecti.y or i ndirectly' fp: poii% 
;,tlcai?*anipa igns.. 

(Indicate page, name of 
newspaper, city and state.) 





Date: 3_ 3 _7 5 







Submitting Office: SAN ANTONIO 

1 | Being Investigated 

'xC - •’V V 


;IAR " 1- 197 S 

6 ho \ve d t h a t ' 5 1.; exec u t : i v es- 
j c o n tni bV t e d >a b 6 9 D 01 

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j^paignsAipvMissourl; ^Aji^the;/ 
["donations were^v plu n tai;fe l 

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. Aaqi 1 ' saiio-;; qaiqM ' .aspoqa 
uiaqr p>|blu ■ q>UB Suo uadoj 
, fihn 3 M ; ‘ pauado -j> aq: ’• p i noqsj 
iiB uaui ?< pauado si iioipsodap 

auo , jp; qBqii. duiABS 

(MOjag aaodj u; 6 ujddjjQ |uno^) 

fcQ-Qi-/. ‘^ 9 tn nqp-aj 

FD-350 (Rev. .7-1 b-b 3 J 

(Mount Clipping in Space Below) 

(Indicate page, name of- 
newspaper, city and. state.) 





, Dist. Judge;^ : 

Curry said : M onday'He'.would . — ■ - ... x ^ 4t- 

not unseal '■ftfiV./sjyornVs-ta- *; A t ,'th e; ,;Jariy 6 c h earing,] 

tements iuhle^slboth'isfdesdn Curry ^ruled?the depositions; 

the dispute, agjrgedi'jf^i&i* •^'made, public when v 

A tto r n eysTf o’ r-Beil-ppp ose < ^ lled o Cu ^^ hey 

disclosure-iof. Statements !’bn -mis-stated (.that; or der'; - ! - . v.£ty| 
, grounds. uVwoiili;^dtf;to • . ‘‘Belktos/al^ of;; 

pr e-tri alfpu blici tyjxs’ur- ^ he > p o s t u re . t h at :;*i t : j should bgj 

rounding Ihev case?' I ^ 
.Eurtherjiso.rne' OdT^ihe *' 
information.'in thedeposi- . 
lions maybe, irrelevant to -j 
the - lawsuit?' according ' to 
Bell pleadings., 

P,1 a i n ii f fs'V • l a wy e r Pa t . 

Maloney saidbisxiientSifiad 
a J ways wanted - the, .deposi- 
tions to.bepublic'andihbt’he ' 

Ij^hra-Jan.' 6 
cleared up the matter./ 

that ‘t ii e>[Hi ffi'i ebdomai n i sS 
best "serve dr by Jack of\iC{ 

(secrecy), baloney said.^ = 
. ‘ H ebvs a i d { jh e' p I a i n ti f f si • 
‘■would. "ia s k Jh' e>;c 6 u rt for? 
clarification >).of -the." earlienp 
order. •' 7 , . , ;■ * « r ;. 

“If s ‘ ,c u is, to m ary j tb at.-) 
deposition s£. -a re v-?pu b fix*/ 
propefy.aftefthey are filed? 
We see; no good reason why'' 
Uifii^Jiguld .be' ap.xy^jTjj onv 
In Bell’s case,” he added. 

, 40 de positions 

Jyiore than 40 'tfepSitfartfs 
have beeriiaken jh prepara- 
...tion-for'the "scheduled, May 

• • The first 1 'deposition !taken 
j — ' Jt'h a tVoKlo c al iB e 1 1 -Vi c e 
f Presideritjahd Gen: Mgr. Cf l 
j f% ; Todd(Dec: ; 19;^was jded ,ii 
! ; with • ' ■ the?f ^district ■ '^cleric * 
Friday. £■,*'. }'$*$' ■ & 

^Gurry •■said he/^ould-not* 
jmseal the ; deposifipIif%r^;. 
th ef 'obj.e c ti’o.n s~;\ jo f, ■ Belf 
/ because! it* might’ force a 
■, relocation of the ‘trial xlue.'tb 
possible^ 'allegations^ ' of 
; f judicial . bias . . • Vf *. 

v : T od d’S; de p ositi o h repor? 
tedly contains information^ 
|; about: the; general man- : J 
ager’s personal political j 
a bout his a ctiviti es as Bell’s j 
; to^ocad-mficial.^ 

Date: 3 _ 4_7 5 





Classi fication : 

Submitting Office: SAN ANTONIO 

| | Being Investigated 


S E R I A L i Z l D ItSr. Hi. t'.D . /.'Wr .. 

j TON 10 



GSA FPMR (41 CFR) 101-11.0 



: SAC, SAN ANTONIO (56-135) 

from : SAl 


subject: UNSUBS ; 

Southwestern Bell Telephone Company, 

date: 3/20/75 



Elefction Laws 

A review of this matter disclosed it was opened 
on 12/4/74 with an allegation that former officers; of 
the cautioned firm had made contributions to the election 
campaigns of certain Federal officials. An LHM was pre- 
pared which states that certain considerations be made 
to the lawsuit currently underway in San Antonio and that 
the Department be contacted to ascertain whether further 
investigation be undertaken. 

This matter was discussed with/ the Criminal 
Section of the Department, and it was advised that no 
additional investigation should be instituted at this 
time. Newspaper clippings concerning the local action 
are being maintained in this file. 

Recently, an Attorney from the Department was 
in San Antonio in connection with the Department’s anti- 
trust suit against AT&T, and he was interested in look- 
ing at newspaper clippings concerning the local suit. 

It is recommended that this matter be maintained 
in a pending status in order to continue the collection 
of newspaper clappings which may be required at a later 

1 - SA 


% S' -SSL 

SEARCilFO . INDEXED ....... . 


i.iMK 1975 


Buy U.S. Savings Bonds Regularly on the Bay roll Savings Flan 

South western Bell office worker Mr s. Toby Hughes 
triggered t^ ^sexifor -promotion” scandaT|nside the 

liftel^sjander suit against Bell and other explosive; 
l^^yel^taei^ News has learned. ' ' 

^j'She^says's h edid i t o u t of ‘'loyalty to the company / 'and Avas/^ 
an^aWay involved in ' sexual . . V - 

ii t0om eiy, , ! nil d‘3-h i r ty-i ;/:#• ,£ 1; 

> r ;M rs } H u g h e s£i s/a/s fee r S r/-' " g=L " 1 ~ ** 1 * - 

^engineering, department •> 

/here. Married to a^Ladkland j 
j/sergeant, she has" been on , 

i/the company payroll since /lion damage suit, filed by 
i;Feb. 10, 1961. I ' the Gravitt family Jn con? 

/: .Early last summeri.she,; junction., with. Ashley, who 
/“voluntarily furnishedini- claims he and the late Bell 
r^ . inf.or nla ti oh/' ga.i nst Texas .chief were, “first 
/both l'. 0. Grayitt; the:No..J‘ marked ’for destruction and 
iB'ell *e#ecufcive Jn/Texas.^ and* then systematically framed 
eSanvAntonio general ^;Cornf.. by company higherups/' 

!; Ashley, according to sources * ?™ e$ ir 

close to the investigation.- ■ Southwestern Bell itself 
n\ " became the target • of . 

Kelays rumors '■ -searching probes in the area 
Mrs. Hughes at that time .! of wire-tapping, political 
relayed to BeH security : of- slush-funding, influence 
■ficer Jerry- . Wallace 7! peddling, rate manipulation 
.rumors .of scandalous . and other alleged violations, 
behavior by Gravitt- and 'Secretary - stenographer 
Ashl/y, the sources J Hughes was personally 
I feeiQse.^ n - ., ^ , i$££&g^(l by M eK^kpl hn 

In essence/ the ;rumors' ? 1 a..* m ^ 

es women 

The res! of the'iniefvTFw 
involved secretary Hughes 
ticking off. v ;Uie /names of 
.several B e 1 T ' w 0 m e .n e m - 
ployes who had been;] 
promoted “under question- 
able circumstances:'.' 

And she told McKaskel at 
one. point that she had heard 
reports . from'.. time to "time 
“that -so-and-so got 
promoted. (inside Bell) after 
going to'parties...” 

‘ Later, Bell of- 
ficers interviewed the 
women named by ‘ Toby 
Hughes /in/her taped con-, 

,u ■ „ . , I Aug. 19 of last year. Whal . -Still : .latec/according to 

•Vcre to l |je effeclitithat |h a d been started by her ear- : j t,ie Bell ■records; .she at-:. 
iGravitt and Ashley, '. were ii er report to security man I tended ,.;at, Ashley’s .iinvita-; 
fsexually promiscuous. : : .;/• : Wallace then rained mo ' tidn'a;party in ; thedovvht6wn- : 
“Being friendly 'at parties / men ^ m . ; ‘ ‘ ‘ 

with Mr. Gravitt and Mr. 'She §3^ Gravitt on one 

Ashley seems to be the way 
to get ahead/’ Mrs. Hughes 
is quo.ted in one Bell secur- 
ity report. 

Her disclosures to Wal- 
lace were transmitted dir- 
■ectly to Jim Vaughan, the 
I Bell security manager in 
Dallas who advised top 
company officials in St. 

Louis of what Mrs. Hughes 
was saying. 

Then Edwin P. McKaskel, 
a top Bell sleuth, was dis-* 

[patched to "San Antonio to . 
check it all out. 

McKaskel later headed up; 
an exhaustive ' probe of 
Gravitt and" AsHJey here, 
using nine imported securi- , 
ty officials to put it 

In the midst of the ongo- 
ing inquiry, Gravitt com* : 
mitted suicide in Dallas and . . . 

Ashley was fired as com-.’ do **• and “would] go out 
mercial manager San of town with him?” 

’Antonio. ■ She said Gravitt ‘.called 

, 4 , , her “maybe four times;’/. 

Then cam e the $29.2 mil- / a fter that but nothing ever 
BELL, Tgr o- 7 r •/ happ^effemb e tween' t trenn P 

s occasion called her and 
I asked her to go to lunch, an 
invitation she, accepted 
/■because what do you say 
when/the vice president 
asks you to lunch... so I 
said/Weil, OK.’ ” ' 


She said the luncheon 
date ended with her- having 
a drink with Gravitt in the 
Spanish Trace Apartments,^ 
where Gravitt escorted her 
to a unit rented by . Bill 
Graveley of the.Quik Print 
Co. to which he (Gravitt) 
had a key. . . 

:N 0 1 h i n g u n 1 0 w a r d ha p • 
pened there or later that 
day, Mrs. Hughes told 
McKaskel,, though Gravitt 
did say things like “when 
your husband gets.' back in 
town what are you going to - 

T r a ve L 0 d g e i : m 0 1 e 1 near 
Bexar 'County Courthouse 



Bell security officials took 
signed statements from four 
female -company employes 
concern ing/$h e i r presence 
in the TraveLodge last Sept. 
11.-13. * 

,)A visiUrig/iienison Bell 
executive and - an important 
Denison political figure not 
employed by .Bell -are said to 
have joined Ashley in what 
[the* company describes as a 
jscx spree.: 

•j Three Be lL T emale em- , 
ployes/admiitted: in their" 
statements ip having sexual 
interco u rse'S [during the ‘ 


Sex activity 

. Mrs/ Hughes • .who’^ says . 
sh'e;was there for only iwo 
hours one: evening took no 
part . in sex - activity and is 
accused by none of those 
present *,/of*V •' unvirtuous 

But/she d?es>-; 

s5»^-McKaskel;that| . 
Ashley .made;, a ! pass ;at;her. f ^ 

• J * * \ ; V . '* L-t* *. J? 

‘And she later identified/ 
for Bell security vmen the/ 
other women; present -at the/ 

jpar.ty,: according Jo .com.v/ 

pany -investigative records. ^ 
Security man A Vallace^in ^ 

a/.dhD.o^ilibfi /t MeF/uMlg 
jv^ e kr -j -s^ ys.; Tnhv 

. telephoned;.:him /shortlyl 1 
before' * attending. the? 
TraveLodge ; pa rty .statin g| 
.she had;’ an invitation fronif 
Ashley and asking ( if*it ‘was| 
advisable TO;go: : x V / i< 

Attends : : M 

Wallace says he told her|l 
to “use’' your own/ 
judgment.” * ' 

She went,. 

However, Wallace in his/ 
sworn statement/insists she$ 
was in no way an under M 
cover agent working *to j sei|j 
up Ashley. • — - -Si 

Mrs. Hughes'today is heldjj 
in high esteem by - Bell ex/l! 
ecuUves and sec urity .'top ffi 
ticks who regard ner as a/ 
key witness in^trial- of the/ 
$29.2 millionvdarhage suit/ 
this May. ‘ 

■ • With seven other > Be lifi 
female -employes she has/ 
been subpoenaed to' give/ 
sworn statements' .March/ 
26-27 in connection with the| 
damage suit: v • . ■ ’ / '>T‘ ^ 
The women Idue to testify/ 
consist mostly; of those pre/ 
sent at the- TraveLodge par-/ 
ty last September. ^^4 
'% s l . had sex’ / 

Bell already /has 1 . slh^J 
tements .from all of .them,/ 
including the “I had sex’/ 
admissions. ' r / / Z 
Apparently the telephone 
company -aims to.find out if/ 

. the women stand re ady * to ; 1 
accuse themselves under/ 
oath March 26-27 , and can j 
be relied on to stick with 
other parts’ of their sta~ r4 
tements to" Bell security .' 

(Mount Clipping in Space Below) 

! ^';tT(.T: ASs6ciATED>RE5S v ^ 

:AtlSTINT^#fi'e Bou|^^he|;^^e"Senate| 

' 'feil l’s^.uUjio.»^^fe^ouf fti^sfie^n^Bel^S^lf;iihorie‘!s^ 
announced caw?’fficrease/fo^nl^5t^^oifg di,S:| 
tance calls •- • . C • •• ■.&:? " ' ’| 

Hearing on the attorney general’s suit for. a temporary in- [■ 
junction is set. for Feb. 18 before state District* Court Judge J 
Tom Blackwell df?Austin. . 

House’ members /Voted 87-48 for the resolution stating that '} 
the 1 e gis 1 at lire . "d oes -hereby approve ,sra t i f y ,andau t hori ze the* j 
action-of the:attorney ; geherar liihg the suitt’ ,.?£% , * _ J 

Repr'TJim 'Nugent, TMKerrville* the sponsor -'and the. ] 
chairman -.of. the, 'House TrapsportationXi Committee, - which. is*4 
,.,consi der. ingJtelepiion e, :^^fe*segula t iombi I lslfsai d* the >ni eas-^f 
QrT was' not untended ,to -expand Hill ! s authority. He* said Hill > 
already had ail the authority :he needed to challenge the ..$45- 1 
million increase that Bell intends toputinto effect March 1. 

“This is- an attempt to tell the attorney general to get after it 
and find oubif-hecan get a fair hearing,’ ’ Nugent’said. He said '•'*! 
he kriewmfno more rapid means to-check the increase, if it 
can oe- stopped legally, tlian through a.court case. . .. 

(Indicate page, name of 
newspaper, city and state.) 





Data: 2 - 12-75 
EditiogpoRTS FINAL 







Submitting Office: SAN ANTONI 0 

(Mount Clipping in Space Below) 

V't-’v.* 1 sVVV'. 

.* , '.k, ■- ''j-'.v,!!'. 'i'? V ’ 

A federal 
jury probe af . Sdutfi^; 

P h o n e ; ^f € q|:“ ' S h : b w pxi / 
signs Tuesday of #e--. 
ing" a^dengthy^nnvds^'; 

political activities;^/- 

The ■ jury; which two ; vveeks 
ago had its ’time extended^ to 
probe Bell/ spent; : iiine;Jiours' 
tu esdayjtak mg'ites f^rn^'fty. 
from four : \\1tnesses^^ * 
One -of ;the\\^triessesilffib- 

St Louis, was Bell l s£ 
, , : vice president , in bHaf’ge .<Tfi ; 
■public /affairs :fbr the entire? 
'South western. Bell' system. 1 : .% 
f '“'A' bell spokesman described'' 
the job of “public. affairs" as / 

■ being an . charge of rate-rnak-K 
d ng.,a n d g e n e r<a Hy^im'ee't'i n gi* 
1 egi slators an d ’ other ,po 1 i t iea 1? 

. individuals.; / ’ - - *'/:/• ,p. 


Two weeks .ago, . the;grand^. 
.[ /-jury* heard from Bell s regi's-f- 
! . tered lobbyist-tin Texas, Ward 
, Wilkinson of Dallas, /v 

The'U.S.' Attorney’s office.; 
■has declined to say what/the 
grand "jury is investigating. 

, and • who has been* 1 
1 ' • su bpoenaed . • • • T: ■* . . 

. . However based on the na- 
; dure .of the jobs of Belbexecu- 
■ ! fives being called/ it would 
. appear the grand jury is 
iJooking into Bellas political? 

• activities.. - 

The other. witnesses ap- 
pearing Tuesday rand.-those 1 * 

*s cheduledy fo r.‘ W e d n e s day 
were notddentified. 

-u^Aisdi, /according ;to /papers 
on. file^with dhe U.S. /District 
t ’Clerk’s office, the' grand jury 
[-is also scheduled to meet Feb. 

1 ^ a nd 25, and March i‘l and 

poenaed to testify was Justin 
Hoy , reUred Southwestern 
JSeiT Vll'ff^resident.^ 11 "TT/TT- 

(Indicate page, name of 
newspaper, city and state.) 





Date: . 2 - 12-75 



Title; • 




Submitting Officer SAN ANTONIO 

jj | Being Investigated 

FD-350 (Rev. 7-ib-bJJ 

(Mount Clipping in Space Below) 

.. “ , ; ASSOCIATED PRE5S . ; • 

AUSTIN — AttyrGen. John Hill 
[ asked "a state appeals court .Friday 
[ to rule that -a- trial court injunction 1 
f against a $45: million rate hike . by 
; Southwestern Bell Telephone Co. be 
! left in effect until the law suit is 
| finally settled. , / •; . : 

! ■ Hill asked the 3rd Court of Civil Appeals to 
I modify its decision that threw, out the in- 

Hill also filed a motion, for rehearing in the- 
case. If the appeals court denies the/rehear- 
i ng, Hill ha s 30 days in. which to file, a writ of 
ePrdh vVuFf the Texas Supreme Court. 

,T h e , telephone : company. inst i t u ted the new 
rates' Wednesday night following the appeals/ 
■ court decision earlier that day.>:*.^/ : . ; 

The increased rates . will cost Texans; 
.$123,000 a day in, increased TatesyjHill .•sai|.J 

Regulation: )f 

Hill said if it is ultimately determined that, 
the company can raise its rateswithout any : 
governmental interference^ then., it- cguf 5 
charge what it wants to make . up for trie, 
money lost while the.issue was decided;|in. 
court. • ' h ^J r - 

• In its decision. overturning* the trial coi^t- 
injunction, the appeals court, said since the; 
legislature had chosen not to regulate the; 
phone rates, the courts could not act in that 
“mfa. 4? • 

(Indicate page-, name of 
newspaper, city and state.) 





Date: 5~17*"7 5 

Edition : HOMK 


Title: . 



Classi fication : 

Submitting Office: SAN AN TONIC 

| 1 Being Investigated 

r > b- / 8S 

- sy . 



MAY 19 1975 . 








to : SAC, SAN ANTONIO (5&-1S5) date: 5/27/75 

from : SA(A) 

subject: UNSUBS ; _ 






This matter is being followed closely through the 
articles which appear in the daily newspapers. At this 
time, no investigation has been requested by the office 
of the USA or the Bureau. 

The lawsu it of T.O. GRAVTTT has been separated from 

that of | land there is a request before the 

courts to have venue changed because of unfavorable publicity. 
In addition, an FGJ is currently looking into SWBT*s political 
activities, and it is not known what the Dept, of Justice 
is going to request in their anti-trust action against the 
Bell System. All of these actions could precipitate addition- 
al work on the part of this office in this matter. 

It is therefore recommended that this case remain in 
a pending status for the purpose of maintaining newspaper 
clippings and other information pertinent to SWBTC. 

FD-350 (Rev. 7-lb-OJj 

(Mount Clipping in Space Below) 


^Southwestern Bell Telephone Co. was told TUesia||: 
Cit-has unlawfully withheld nearly $300,000 In : su|yif 
vvors benefits from the widow of a Bell executive who 
• committed suicide lasTUriober! ' 

(Indicate page, name of 
newspaper, city and state.) 





Date: 6-lS-*75 






Classification : 

Submitting Office =SAN ANTONIO 

| j Being Investigated 

SEARCHED .... ....... .INDULD 


JUN 191975 


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r i-'-o j u insv, 


; proms', • • Houston (62-3016) (qj '• V". 


^ , \ ’ \ ; ; . "V.- 0"r*. 1 f s^f: r f-;-s] : • ' 

■ ••••• RE HOUSTON AIRTELS SEPTo-lS. AS© 18/ 1975 „ . : V i; .•• •••'■•• •.: y. 

//AUSA FRED BENNETT ADVISED Sa | "~~| p^ ^EPT 0 24, v 



,-t > SAN AS3TONI 0 ADVISED AMo . . .. 





{Attn: General Investigative Division) 

■ . **' b2 


' b7D 


SAC, SAN ANTONIO (62-0-15597) ' 


ReHOairtel to the Bureau. 9/15/75. cautioned. 






Enclosed for the Bureau is a newspaper article which 
appeared in the San Antonio Express, a San Antonio, Texas, daily 
newspaper, on 12/9/76. 

Review of San Antonio indices reflects reference to reRCairtel. 
No additional indices references located, 

On 12/9/76. discreet inquiry wilffi 


lie is not xnown to nave oeen in a liaison 
position Detween the telephone company and any law enforcement agencies. 

The above is submitted for the information of the Bureau* 

' sa . • 7 \\ • , • • 

*. , ♦ ♦ 

No further '.action- being taken on this matter by 
San Antonio Office, UACB. 


, By BEN KING Jr, 

A fired Southwestern Bell 
Telephone Co, executive testi- 
fied Wednesday he was ordered i 
to help the FBI and CIA with 
wiretapping activities. 

James Ashley made the statement 
in detailing what he termed Bell's i 
obsession with wire tapping during • 
an invasion of privacy suit against , 
the company, > 

** Wiretapping is a sick obsession j 
with the telephone company; they’ve 
got to listen/* he said. ■ 

During Wednesday’s testimony 
Ashley recounted his career with Bell 
up to the time of his firi ng in N o- 
\ r ember"of 197*1. ^ - 

/( J u 

Between 1955 and 1966, As hley said, 
THTwas “Bell’s point of contact with 
law enforcement agencies like the 
ClAandFBI." ; . . ^ V/ ^ 


The agencies, according to his tes* 
timony, engaged in wiretapping acti- 
vities without court orders. . r x ,, 

"l was ordered by the company, to 
provide any and all telephone equip- , 
mcni to any law officers who pre-‘ 
senlcd the proper credentials/’ he 


Character: CIVIL 


Classification: 62-0 

Submitting Office: SAM ANTONIO 

| | Being Investigated 


, Ashiey said the wiretapping acti- 
vities he* was asked to aid in were 
illegal. However that part of his tes- 
timony was ruled inadmissible by 
57th Dist. Judge Franklin Spears. 

The 25-year Bell veteran said as a 
result of his career: ‘Tve listened 
and been listened to as much as any 
man in America.” 

“They (Bell) can dial right into 
your phone conversation without you 
knowing it,” he said. 


He said Bell has employed 70 peo- 
ple in San Antonio to listen in on 
conversations between customers 
and operators to grade the operators* 

During his own career, Ashley 
testified, he had listened into thou- 
sands of conversations and that 
thousands of his phone conversations 
were monitored. 

Ashley is suing Bell because he 
believes the company tapped his 
phones after his dismissal, in addi- 
tion to turning over his long-distance 
records to Beil attorneys. 

His suit charges other Bell execu- 
tives and its attorneys examined his 
long distance records after he filed a 
$29 million damage suit against Bell. 
J Asffieylestified according to Bell’s 

own policy it does not have the right 
to inspect the long distanceTecortls of 
dismissed employes. 

He said according to Bell’s Secrecy 
of Communications Code, the com- 
pany cannot release a customer’s toll 
records without notifying him. 

Ashley also testified he has 
personal knowledge Bell inspected 
the long distance records of other 
companies that had sued Bell. 


However, Ashley was not allowed to 
continue testifying concerning other 
cases that have been filed against 

Earlier Wednesday a deposition by 
wire-tap expert J. L. Patterson was 
read. It stated Bell has sold the long , 
distance records of various com- 
panies to their competitors. 

Patterson’s deposition said the 
companies would buy the records to 
learn who their competitors were 

Patterson was unable to testify in 
person because he is serving a. five- 
year term for using a device which 
makes it impossible for Bell to detect 
long distance calls. 

Ashley is expected to continue tes-. 
tifying at 9 a.m. Thursd ay in 57th 
District Court. ^ 

7 . testifies 


There are 360 active Southwestern 
Bell Telephone Co, listening posts in the 
San Antonio commercial department 
alone* James Ashley told a 57th District 
Court jury Thursday. 

Under questioning by his attorney, 
Pat Maloney* Ashley detailed the 
extensive practice of “service 
observing** in the San Antonio area* 
including one equipped with a 

Ashley*, a fired Bell executive, took 
the stand Thursday in his own behalf in 
the $4 million invasion of privacy suit, 
he and his wife filed against Bell. 

He opened his testimony Wednesday 
by describing the Bell system as a 
company infected with “a sick 
obsession with . wiretapping and 

„Ashl.e,Y-,said the entire Southwestern 
Bell system spends $28 million yearly in 
its “service observing” operations — 
listening to Bell personnel dealing with 
customer calls. 

Maloney led Ashley Thursday on a 
journey of his past 25 years of 
experiences and former jobs with Bell. 

Ashley told the court that in any one 
of the 16 or 17 district offices in San 
Antonio* there are at least 63 locations 
where customer calls to Bell service 
representatives can be listened to. 

“In one service observing room, 
there is even a loudspeaker system set 
up so that entire groups may listen in on 
conversations,” he declared. 

“On numerous occasions I assisted 
the FBI, the CIA and narcotics agents 
in wiretapping,” Ashley testified. 

He also said law enforcement officers 
“got an absolute free hand” in their 
examination of long-distance or other 
customer billing records! 

“We were told by Bell not to inquire 
into the purpose” of the requests by 
lawmen, he stated. 

Ashley testified Wednesday that 
" sex yice observing is the single 

personnel; No one likes being listened to 

He gave the jury a description of his 
various positions at Bell. 

He said he was chosen as one of the 
first persons to attend an intensive 
management training program started 
by Bell in the early 1950s. 

Ashley said he was trained in all 
phases of Bell operations, from 
engineering to plant management to 
accounting and marketing. «; 

“Do you consider yourself an expert 
on the Bell system?*’ Maloney asked. 

“Yes, sir, I do,” answered Ashley. 

Ashley said he had helped design a 
telephone monitoring system ordered 
by Braniff Airlines. 

“If there is an expert in the field of 
designing, implementing and testing 
listening equipment with more 
knowledge than me, I haven't met 
him,** Ashley said, 

Ashley said there were more, than 
“1,000 locations in San Antonio where*-. ' 
lines could be tapped.” 

“But Tknow of no one in the whole 
Bell system in the past five yedrs who 
has been fired because of wiretapping," 
he went on. 

“Each year, each Bell employe signs 
a statement saying he will not cheat, 
steal or listen." , . ... j 

“Hundreds are fired each year for 
cheating. Hundreds are fired for. 
stealing. But no one is fired for 
listening. That would only happen if all 
100,000 employes in Southwestern Bell 
were perfect,” he said. 

Maloney also questioned Ashley 
concerning the suit filed by Santel (San j 
Antonio Telephone Co.) against Bell fojv/' 
restraint of trade. P\ t / >y 

Ashley said he had been informed by 
Hank Hudson, general marketing >7\ 
manager for Bell in San Antonio, that ^ 
Samel's long distance records were 
examined "to determine ownership of 



Date: 12“9"*76 

Edition: FINAL 




CONCERNING*""^3T"^“l , 5 [j 
Submitting Offlce-.g/iN ANTONIO 


Being Investigated 



DEC 16 1976 


FD-350 (Rev. 7-16-63) 

Wiretapping and lis- 
tening in on telephone 
conversations is a 
“sick obsession” with 
Southwestern Bell 
Telephone Co., a fired 
Bell executive testified 
here Wednesday. 

James Ashley, the ousted 
official, made that state- 
ment as he began. his story' 
of a 25-year association 
with the phone company. 

He and his wife Bonnie 
are suing the company for 
allegedly wiretapping their 
phone and misusing their 
long distance billing re- 

Ashley took the stand late 
Wednesday, the eighth day 
of the trial before a 57th 
District Court jury. 

He testified he had been 
instrumental in turning 
over Bell wiretapping 
equipment to law enforce- 
ment agencies. 


“I was the point of con- 
tact for law enforcement 
agencies, including the FBI 
and CIA. I was expected to 
provide facilities for illegal 
wiretapping from 1955 to 
1966,” he said. 

Ashley ,Jhe general com- 
mb r c iaTm a n a gc r for Bell 

(Mount Clipping in Spoco Below) 

in San Antonio before he 
was fired in October 1974, 
said he made the illegal 
wiretapping equipment 
.available without subpoen- 
as to law enforcement of- 
ficers showing him proper 

He admitted that he was 
an expert on listening in on 
phone conversations 
between phone company 
employes and customers. 

Listening to employe- 
customer conversations 
without either party know- 
ing it is being overheard is 
part of the employe’s dis- 
ciplining, he said.- , 

, “It’s not something I’m 
particularly proud of. In 
my opinion, I’m as expert 
in this field as anyone," he 
said. ' 

“After 25 years, I’ve lis- 
tened and been listened to 
as much as any . man in 
America,” he added. J 
Ashley said there were 
two methods used to wire- 
tap. • - • ;; •’ 

The first requires that 
the tapping be done at the' 
customer’s home or office, 
he said. ‘ 

“If you wiretap at any 
other location, it is impos-’ 
sible to do without phone 
company cooperation,” he 
said. * 

He backed up testimony 
given earlier in the trial 
which revealed that more 
than 1,000 phone company 
employes, can wiretap, or 
listen in on phone conver- 
sations, - ; 

He said the only things 
which prevented these em- 
ployes from eavesdropping 
is the strength of Bell 
management and the em- 
ployes’ integrity. 

The 100,000 Bell em- 
ployes sign a pledge yearly 
in which they vow not to 
steal, cheat or listen, Ash- 
ley said. 

(Indicate page, name of 
newspaper, city and state.) 




Dale: 12— 9”*76 






Classification : 3A - ti2 0 155 !^ 

Submitting OfflceigAN ANTONIO 

| j Being Investigated 

SEARCHED, . . . 


DEC 16 1976 


t v {Rc v» 

7-1 6*6 3 ) 

(Mount Clipping in Space Below) 

Three family dogs 
were killed in a plot to 
harass a fired South- 
western Bell Tele- 
phone Co, executive’s 
family, testimony 

showed here Thursday. 

That's what James Ash- 
ley, the ousted Bell official 
told jurors in 57th District 

Asked about the damages 
he felt he suffered at the 
hands of Bell because of 
alleged wiretapping. Ash* 
ley said: 

“It’s the constant feeling 
of never being alone. It’s 
constant harassment and 
the shooting of two of your 
wife’s dogs and the poison- 
ing of the other.” 


Ashley, said after the 
phone company fired him, 
iiis family was in constant 
fear of its life. 

Fired by Bell in October 
1974 following an internal 
probe of the company, 
Ashley testified about his 
fight with the phone com- 
pany including threats 
made on his life by a Bell 

He' and his wife Bonnie 
are suing Bell for allegedly 
misusing their long dis- 
tance billing records and 
for wiretapping their 
phone. . 

The couple is suing Bell, 
for $4 million. 

Ashley testified in his 
day on the, stand Thursday 
that long distance phone 
records of San Antonio city 
councilmen were examined 
by the phone company 
during rate hike negotia-; 
tions here. .. 

Security « 

He told the jury that. 1 
dossiers were prepared on* 
council members for rate 
making by Bell security' 
personnel from 1972 to 1974. 

"1 discussed with the se-* 
curity personnel the signi-1 
ficance of the security 
dossiers. The significance 
was obtained 'from whom 
the councilmen were 
calling,” Ashley testified. 

Ashiey told the court that 
C.L. Todd, general 
manager for Bell in San 
Antonio, and Todd's attor- 
ney, Hubert Green, made 
threatening remarks to 
him at the funeral of 

See BELL, Pg, 15- A 

(Indicate page, name of 
newspaper, city and state*) 




Date: 12 - 10~76 






Classification s^— Q i 1 fj Q 7 

Submitting 0((lce:SAN ANTONIO 

| | Being Investigated 


DEC 16 1976 


former Bell Texas chief 
| T.O. Gravitt; 

Gravitt committed sui- 
Lcide in Dallas in October 
! 1974, shortly after the in- 
1 ternal probe of the com- 

i P an y* ‘ ' 


I Todd approached Ashley 
: prior to the funeral service 
and said, “Jim, I just can’t 
believe you sent an attor- 
ney to St. Louis/’ Ashley 

Ashley was first su- 
: spended and then fired 
from his post with Bell, 
which has headquarters in 
St. Louis. 

He testified he contacted 
the attorney after he was 
suspended because he 
“considered things more 
serious” than, a one-week 

Todd then said to Ashley, 
’’You know that guy (Gra- 
vitl) did wrong,” Ashley 


“That son of a b in 

there is dead because he 
stole money and you know 
it,” Ashley testified Todd 
told him. 

Ashley told the jury he 
replied, “That's not true 
and you know it.” 

Ashley said Todd then 
asked him to be “reasona- 
ble” but he said he did not 
feel he could come to terms 
with the phone company. 

He said he told Todd, 
“David did all right 
against Goliath once.” 

Todd then told Ashley, 
“You may get an amount of 
money out of this, but 
you'll never live to enjoy 
it,” Ashley testified. 


Todd, (op Bell executive 
in San Antonio, told Ashley 
several employes would be 
UnMrn^y about his decision 
tolT^a the company and 

that the employes would/ 
“hound” him “to the ends J 
of the earth,” Ashley testi-,. 
fied. ;-Vj 

After his conversation^ 
with Todd, Green ap-/; 
proached Ashley, the fired * 
official testified. . . . 

The attorney told hini!. 
that San Antonio papers ; 
were running stories about/ 
a certain Bell executive's 
suspension, Ashley said. 

“Don’t you think that- 
whoever that guy is if; 
would be best for him to letn 
up?” Ashley said Green/ 
asked him. / * 

Ashley said friends in the" 
phone company refused to^ 
talk to him’ after he wast- 
fired and he then filed a $29^ 
million suit- against the^ 1 
company. , ‘ 


That suit, currently,, 
pending in federal court;'! 
charges Bell with libel and,-; 
•slander and wrongful death/ 
in Gravitt’s suicide. . V/ 
Gravitt’s survivors are : 
also parties to the suit. • 
Ashley said friends, 
working in Bell told him, 
the company knew' who lie J 
was calling. . • . !*: 

He testified one of them : 
told him, “My God, Jim,/; 
they know about the neigh-/ 
bors’ phones, the pay sta-7 
lions, about everything. 
They’re too powerful. Don’t 
fight them.” 

Friends who were Bell, 
employes then asked him . 
to quit contacting them fun, 
fear of losing their jobs, he 

lie said his family and he; 
were “untouchables,” Ashv 
ley. added. . ;*y 

He also told the jurors 
that his family “huddled in 
corners and whispered*!,;- 
when they were near areas - 
they felt the company had; 
placed wiretapp ing equi p-/ 
incut. _ . . M ., at- 

" By BEN KING Jr. 

Long distance telephone re- 
cords of local City Council 
members have been examined 
by Southwestern Bell Tele- 
phone Co., a fired Bell execu- 
tive testified Thursday. 

James Ashley testified Bell exa- 
mined council members' long dis- 
tance records in 1972 and 1974 during 
Bell’s rate hike negotiations with the 

Ashley gave the testimony in de- 
tailing alleged instances where Bell 
either invaded his privacy or that of 
other people with wiretaps or inspec- 
tion of their phone records. 

He also recounted the adverse ef- 
fect Bell's alleged invasion of privacy 
has had on his own family during the 
past two years. 

Ninth day 

Ashley’s testimony came during 
the ninth day of testimony in the trial 
of his invasion of privacy .suit against 
■the company. ’ 

He is suing Bell because he be- 
lieves the company tapped his phones 
and inspected his phone records after 
he filed a $‘29 million damage suit 
a gainst jr, following his dismissal in 
November of 1974.* ' 

A shley said results of BeUjj cop pci 1 
records search became part of se- 
curity dossiers Bell kept on the 
councilmen, Ashley told the 57th 
DivStrict Court jury. „ ; * - 

“I discussed with the security per- 
sonnel the significance of the security 
dossiers. The significance was ob- 
tained from whom the councilmen 
were calling/’ Ashley testified. 

Made it clear 

Bell also inspected the call records, 
of two companies who had filed suits 
against it , Ashley later added. 

In his own case, Ashley said, he 
knew he was under Bell’s surveil- 
lance because the company’s execu- 
tives made it extremley clear to him. 

; Shortly before his dismissal, Ash- 
ley testified, he met with several Bell 
officials who (old him they knew who 
he was calling because they had his 
Jong distance records. 

^A B ell security agent tol d I Ashley , • 
,r vVc have your reco r d s , ^XsTiTey 

Date; 12 - 10-76 





. Character: INFORMATION 


Claest UcationiSA -^1 55 

S ubmi t tin q 0 1 1 1 ce: S n H A \i T 01 

| | Belnq Investigated 


serialized xrrn^Jurr 

DEC 16 1976 



\ * 

r We have everything , 
we know everything' 

said. He also said one told him, “We 
have everything,, we know every* 
thing. 1 * 

“They (the security agents) want- 
ed me to give evidence of Gravitt’s. 
wrongdoings that didn't exist/' Ash- 
ley testified. 

He was referring to the late T. 0. 
Gravitt, the former head of Bell's 
Texas operations who committed 
suicide after he was named in the, 
same investigation as Ashley. 

It produced charges the men 
abused their expense accounts and 
were sexually promiscuous with em- 
ployes. / 

One of the allegations in the $29 
million suit filed by Ashley, and the 
Gravitt family is Bell wrongfully 
caused Gravities death in November 
of 1974. 

Threat cited 

T)urfnlf’GraviU’s funeral, Ashley 
testified, C. L. Todd, Bell’s vice-pre- 
sident for the San Antonio area, 
threatened his life in an attempt to 
stop him from filing the damage suit. 

Ashley said Todd told him: “ 'You* 
may get an amount of money by do- 
ing it (filing suit), but you'll never 
live to enjoy it., 

“ 'There arc Bell employes who will 
hound you to the ends of the earth/" 
he said Todd told him. 

Referring to Gravitt, Ashley testi- 
fied, Todd told him: “ ‘That S.O.B; is 
dead because he stole money/ */ 


• Ashley said after the $29 million 
damage suit was filed he and his 
family suffered extreme mental an- 
guish because they knew their phone 
was tapped. 

“We huddled in corners and 
whispered because we knew the ca- 
pability of the devices that were be- 
ing used/ 1 he. said. 

Referring to Boll’s alleged harass- 
ment of his family, Ashley said, “It’s 
a constant feeling of never being 
a lone. IBs constant harassment like 
the" shooting of two of your^Tffc'& 

dogs and the poisoning o f anot her 
one. “ — 

“It’s constantly fearing for your . 
life.". , 

After the suit was filed, Ashley - 
testified, all of his family’s friends 
who are Bell employes stopped con- 
tacting the family. . 

“We’re in a vacuum, we’re the un- 
touchables/’ Ashley testified. 

Codes used 

Prior to the damage suit’s filing, 
Ashley said, he became aware his 
home phone was tapped through 

Gravitt told Ashley both of the 
men’s phones had been tapped by;: 
Bell security agents. P * t ‘ 1 / / 

“They had embarked on an at- 
tempt to wiretap me in an attempt to 
discredit Gravitt through his 
friends/* he testified. } 

After the two men learned their 
phones were tapped, Ashley said, 
they started calling each other 
through codes and arranged secret 
meetings. . 

Ashley is expected to continue tes*' 
tifying at 9 a.m. Friday i n the 57th . 
District Court. - i "/ y 

FD-3 50 (Rev. 



(Mount Clipping in Space Below) 

Southwestern Bell Telephone Company scored somewhat of a victory in 
the $4 million invasion of privacy lawsuit filed against it by fired company 
official James Ashley. 

Fifty-seventh District Court Judge Franklin Spears granted instructed 
verdicts on allegations of unauthorized use of Ashley’s long distance 
records by Bell and on conspiracy. 

Spears, however, did not 

grant the verdict on allega- 
tions by Ashley of invasion 
of privacy. 

The ruling means the 
jury will so ley deliberate on 
the invasion of privacy 

The motion for instructed 
verdict was filed late in the 
afternoon by bell attorneys, j 


Ashley and his wife, 
Bonnie, are suing the tele- 
phone company for al- 
legedly wiretapping their 
phone and illegally using 
their long distance records. 

Earlier, Ashley testified 
that revelation of the phone 
company’s activities had 
changed his children’s al- 
titude and had a “demora- 
lizing afreet” on their out- 
look towards organizations. 

“It has. affected their 
opinions of the so-called 
establishment,” the ousted 
Bell official said. ”1 know 
it was demeaning for 

He testified his children 
had respect for such or- 
g anization s 1 h* f ore the 

"Pay phone 

Ashley, who spent his 
fourth day on the witness 
stand, explained to the 
court how the telephone 
company monitored calls 
he made from pay tele- 

He said that by charging 
[the calls he made on pay 
telephones to his home 
number, Bell could deter - 1 
mine the pay station he 
used because the numbers 
would appear in his long 
distance bill. 

, Ashley reiterated earlier 
testimony that the late T.O. 
'Gravitt had told him he 
•was being wiretapped prior 
to Gravitfs suicide. 

“He knew what was go- 
ing on,” Ashley said. “He 
, was vice president.” 

; Ashley, who was Bell's 
: general commercial 
! manager in San Antonio 
when fired in October 197*4, 
said he believed his resi- 
dence home phone in Blan- 
co was also lapped by Boll. 

Although his home phone 
is serviced by an other tel e- 
I rfTflrrnr-^ i m p a n >\ As fife y 

testified he believed Bell 
was tapping^it on its own. 

He sai d he h ad talk ed 
witn“ollicials of thTTatler^ 

company and 
nau noon told irwa3~rmt 

“There was no necessity 
for them to be involved," 
Ashleh told the court. 

Ho continued to back up 
much of his earlier 
testimony about Boll- tele- 
phone’s illegal wiretapping 
for various federal govern, 
m en! l aw enforcement 


(Indicate page, name of 
newspaper, city and state*) 




Dale: 12—14—76 






Clasel fication : 

Submitting Oflice:£ /. J., ANTONIO 

.***■ fin 

1 ] Doing Investigated 


Southwestern Beil Telephone Co. 
began its defense Tuesday in a $4 
million invasion of privacy lawsuit 
after winning one phase of the legal 

Bell is only having to defend itself 
against charges made by fired Beil 
executive James Ashley that it 
wiretapped and eavesdropped on 
Ashley’s conversations Bell denies the 

Dist. Judge Franklin Spears ruled 
Monday that Ashley arid his attorney, 
Pat Maloney, had not presented 
sufficient evidence to prove charges 
Bell made improper use of Ashley’s 
long-distance telephone records. 

Spears also ruled that no conspiracy 
existed between Bell's San Antonio 
General Manager C. L. ‘‘Chet” Todd 
and Beil employes David Burchett and 
JoeTocfir'an. * 

As a result of Monday’s ruling, 
Burchett and Cochran were dismissed 
as parties to the suit. 

Bell’s first witness Tuesday was Lee 
D. Bryant, Bell’s equipment chief who 
presented a diagram of telephone 
cables from Maloney’s downtown law 
office to the Bell central office 

.'Ashley has contended that Maloney’s 
phone was tapped by Bell because he 
used Maloney’s office to work on a $29 
million libel and slander suit against 
the telephone company, now pending in 
federal court. 

Another witness presented by Bell 
was Kenneth D. Hopper, an engineer 
from Bell Laboratories Inc., New 
Jersey, who testified on electronic tests 
he performed on certain equipment and 

Spears’ ruling Monday afternoon 
came after Maloney rested his case 
after 10 days of testimony. 

Bell lead attorney Jack Hebdon 
presented the motions for instructed 
verdicts to Spears shortly after the jury 
was sent home early. 

Spears overruled Bell’s motion for an 
instructed verdict on the issue of 
whether Bell wiretapped or 
eavesdropped on Ashley’s telephone 
c|[is: — — r*. 


~ Soulliwesterr) Bell Telephone 
Co. attorneys offered evidence 
Tuesday to counter charges its 
servicemen made unsolicited 
calls to a fired executive’s! 
home. ... I 

James Ashley, the former execu- 
tive, lias testified during the trial two 
unsolicited calls were made during; 
the two months immediately prior to| 
his dismissal. i 

Ashley's attorneys are trying to 
prove Bell invaded their client's pri- 
vacy by allegedly tapping his phones. 

Last week, Ashley and his wife 
Bonnie testified they knew of two se- 
parate instances when Bell service- 
nij>U entered their home without he - 
-nig asked" rv '~~ 


However/ Richard Vehige, Bell's 
local plant personnel supervisor, 
produced records which indicated 
both of the calls had been requested 
by Ashlcv. 

Vehige said the call made in Au- 
gust 1974 was the result of Ashley’s 
request to have his bell chimes re- 

After the initial request, Vehige 
said, Boll repairmen had to make 
another call in October to the Ashley 
home because the bell chimes had not 
been fixed. 

The Bell employe said he specifi- 
cally remembered sending service- 
men to make? the October call be- 
cause Ashley was a high-level execu- 
tive at the time. He was dismissed in 
November 1974. 

Service slips 

Vehige also produced service slips 
which indicated the calls hud been. 

■ made in October and August at Ash- 
ley’s request. 

- However, Pat Maloney, Ashley's 
attorney, charged Bell had manufac- 
tu red Hie, records specifically for the 
invasitmof privacy trial. a ’ 

Ashley and his wife ha d testified 
tTieirTTaughter had let the servicemen 
into their home in August and a 
neighbor let Bell repairmen later in 

Both Ashleys testified neither of 
them were home on both occasions. 

Also during Tuesday's testimony; 
several Bell employes who are ex- 
perts concerning wiretapping testi- 
fied evidence offered by Ashley’s at- 
torneys did not prove his phones were 
tapped. ,, 

Earlier in the trial, a deposition by 
ttire-tajf expert J. L. Patterson was 
read which said he examined Ash- 
ley’s phones and found evidence they 
were tapped. 

..Hc__aJs.p found evide nce whic h 
slTowed one of Maloney’s phones' had 

been tapped, according to his depo- 

sxmrr—'' ■ — - 

However, Kenneth D. Hopper, a 
Bell laboratory technician, testified 
the methods used for checking taps 
was ineffectual and provided no po- 
sitive proof. 

He also said an extra wire Patter- 
son testified he found in Ashley's 
home phone is not proof the phone 
was tapped. 

Hopper said an extra wire is often- 
left in phonos so extra lines eyn be 
added in the future. 

He added, “Most wire laps cannot 
be detected with the methods used by 
J. L. Patterson." 

The testimony of two other expert 
witnesses called by Bell backed up 
Hopper's testimony concerning the 
acceptability of Patterson's testi- 


PattTTrsbn is currently serving a 


P/'.C-E 3 A 


Dote: 12-15-76 

Edition: HOME 




4r&'-ygs~- yo 



five year prison term for using a de- 
vice \vfii?h makes it impossible for 
Bell to detect long-distance calls. 

Also Tuesday, Disk Judge Franklin 
Spears ruled three top Bell execu- 
tives are no longer parties to Ashley 's . 
$4 million invasion of privacy suit. 

The executives had been named as- 
defendants in the suit along with Bell 
when it was filed in January 1975. 

However. Monday Judge Spears 
ruled insufficient evidence had been 
presented for the jury to consider 
whether the executives had conspired 
against Ashley, as he had charged. 

As a result of the Monday ruling. 
Judge Spears said the executives 
should no longer be parties to the, 
suit. ‘ • 1 ' T. 

Testimony in the trial is scheduled 
to continue at 9 a.m. Wednesday in 
57th District Court. It will mark the 
the trial. — “ — ? J 

FD-3 5 0 (Rev, 7*16-63) 

(Mount Clipping In Space Below) 


The “Bell Chime Brigade'" was 
thrown into battle Wednesday as 
Southwestern Bell Telephone Co. 
moved forward in its defense of a $4 
million invasion of privacy suit. 

Fired Bell executive James Ashley, 
who filed the suit against his former 
employer* has made allegations that on 
the day he was suspended (Oct. 9, 1974), 
Bell sent personnel to his home to 
install wiretaps. 

But Bell* in a series of six witnesses 
dubbed the “Bell Chime Brigade*"’ 
tried to show that it was Ashley himself 
who initiated the repair call to replace a 
chime on his telephone at his residence. 

The persons testifying Wednesday 
were all involved in ordering and 
dispatching repairmen to the Ashley 
home that day, as well as the 
repairmen themselves. 

Testimony showed that repairmen 
installed a chime on Ashley's telephone 
to replace the one that wasn’t working. 

Ashley’s attorney, Pat Maloney, has 
claimed that Bell created false repair 
documents concerning the alleged 
service calls. 

Bell’s defense began Tuesday 
morning after defense attorneys won 
two segments of the suit filed by 

Judge Franklin Spears Monday 
entered instructed verdicts clearing 
Bell and key executives on charges they 
made improper use of Ashley's long 
distance toll records and conspired 
against him. 

Most of Tuesday’s testimony was 
taken up by witnesses who disputed 
ciaims made by a self-styled 
electronics expert, J. L. Patterson. 
‘^Patterson testified by deposition that 

he examined the Ashley household 
phones and found evidence of “extra 
wires” in one phone, concluding that 
that phone had been bugged at one 

Patterson also testified that he 
examined phones in the law offices of 
Maloney and found them to be bugged, 

Bell brought Kenneth D. Hopper from 
the Bell Laboratories in Homedale* 
N.J., to testify concerning the readings 
Patterson took on the Maloney phones. 
Hopper said he constructed a model of 
the telephone lines from Maloney's 
office to the telephone company. 

He said that, like Patterson, he too 
found a difference in readings on two of 
the lines. However, he said this was due 
to more than 1,000 feet of extra cable 
being present at the end of the system, 

He also testified that extra wires are 
not uncommon in telephones and are 
usually covered with black tape. 

Another expert, Samuel W. Daskam* 
general manager of an engineering 
firm in Connecticut which 
manufactures wiretap tracing devices,' 
said the tests performed by Patterson 
were invalid because they measured 
only current output at one end of the 
line and could not be used to trace or 
confirm a wiretap. 

Patterson had also testified that he 
traced the suspected wiretap on the 
Maloney phone to a phone equipment 
room right outside the door to 
Maloney's office. 

A Bell employe, T.W. Stapper, who 
supervised the phone installations in 
the building housing the Maloney 
offices, said Maloney’s line does not go 
through the room mentioned by 
Patterson, but can be reached only by 
going through another private^TTTce. 

c A Southwestern Bell Tele- 
plioneXo. vice president testi- 
fied Wednesday there have 
been several instances where 
Bell has fired employes for 

C, L. Todd, the Bell executive, gave 
the testimony during the trial of a 
suit by a fired Boll executive who 
claims his phones were tapped by the 

Attorneys on both side uf the suit 
attempted to use Todd's testimony to 
discredit previous testimony by their 
opponent's witnesses. 

Pat Maloney, attorney for James 
Ashley, the fired executive, pointed 
; out several Bell executives have tes- 
tified they were unaware of any ille- 
gal wiretapping by Bell. . 

Ouster list 

When 57th Dist. Judge Franklin 
Spears recessed the trial at the end of 
its thirteenth day, Todd had detailed 
1 17 instances where Bell employes 
, were fired for wiretapping. 

Todd indicated lie had not finished 
, reading from the dismissal list which 
started in 1948. 

• In questioning Todd, Maloney said 
several top Bell officials had testified 
they were unaware of the phone 
company, ever being part of illegal 
wjmrrppthg activities. 

f ice president of firm 
testifies there have been 
several employes dis- 
missed for wiretapping 

\ ■ . 

“You don’t expect this jury to ever 
believe you (Bell) don’t wiretap. It 
just won't fly.” Maloney said. 

Todd offered to explain the appar*. 
ent contradiction, but Maloney said 
lie did not want to hear it. 


Maloney also charged the only rea* 
son Bell fired the several employes 
was because they were apprehended 
in the act by people outside of the Bell 

Todd said the list he was reading 
from did not detail how the employes 
were apprehended. 

Todd’s testimony revealed Bell 
employes were dismissed because 
they were listening in on conversa- 
tions- as operators or were caught, at- 
tempting to install wiretap equip- 

Attorneys for Bell originally begun 
the line of- questioning about phone 
company employes being fired for 
wiretapping activities. 

Ashley had earlier testified Bell 
never fired employes for/ wi retap - 
ping because it did not enfdrC? us ? 

Date: 12-16-76 

Edition: HOKE 





security rules. ■' 

He said he did not know of any 
employe being dismissed for Wire* 
Japping activities while he was with 
the company. - l ' 

However, testimony revealed there 
were at least two firings within Ash- 
ley's area while he was with Bell' . 

Ashley’s suit charges Bell began 
tapping his phones after, he was dis- 
missed in October. of 1974 from his 
executive position with the company. 

After Ashely was dismissed, he 
filed a $29 million damage suit 
against the company. 

Charge denied 

Also during Wednesday’s testi- 
mony, Paul Sickbcrt, a telephone re- 
pairman, denied he found* a battery*, 
jike device in the yard of the Ashley’s 
home after they moved to Blanco. 

A former neighbor of’ the Ashley’s, 
Flora Duvall, had testified a tele- 
phone repairman found a device that 
could he used in wiretapping a few 
months after the Ashley’s moved out. 

However, Sickbert, who would have 
been the repairman to make the call 
on the day Mrs. Duvall testified 
about, said he had never seen Mrs. 
Duvall. •* 

He also denied finding any sort of 
device in the Ashley yard. 

Testimony in the $4 million da- 
mage suit is expected to resume at 9 
aiiTrmttfsday iu 57th pistrfcTT^urjT 

.FD-350 (Hev, 7-16-63) 

(Continued from Page 1.) 

: .his. testimony about what ho said was a 
| clandestincjmeeting in a motel parking 
lot requested by Ashley four days alter 
Ashley v/as suspended. 

Reed said "he called Todd to infnrm 
him about, the meeting. Reed said 
Ashley mentioned, that “Nader got a 
million dollars from' General Motors, 
didn‘t he?” 

Todd then took i My. stand to tell the 

onrt he had passe /the Ashley quotes 
alni.g to corral e j^adquarters in St. 


Ashley attorney Pat Maloney 
accused Bell’s public relations staff of 
fabl e; -.Uiig the Ralph Nader quote and 
send lisp it out to the news media 

Maloney ah>o attempted to get Reed 
to testify to how much money Bell had 
lost in rale increases because of the 

Though blocked by Judge Franklin 
Spears. Maloney did say Bell had lost 
J • more \ tun mi l i n>n. ” . : 

“These arc a greedy, grubby bunch 
■*-. wh- would Jo anything for money,” he V 
blurted out . •/ •. 

Todd a I ki UM»fv*d to ihe number of 
P./JJ t *?nph‘C ' who have been fired for 
v, '-eiapping o.f. eavesdropping; 
M.-ior-y ins < mended that no Bell 
e m ; * 1 *i y • rv- :i • *: e ver f i red for 


' i y w* !• J; ns a corporate 
nt*-.. v* :■ ■ 1 f, ‘ • * ;» of Bell 

s-n r . fit* m<\ to 1976 

•; • *. •, i j .■ w-ti; a hit *>f 17 employes 

\v . . ,./i '• : ‘ ■ ! f eo for wu capping or 

■ -c 

•! il 


t ' " ‘ cr * 




\ ii 

.A of witnesses, dubbed the 

‘•‘Boll 1 


««t; J> igade ’ to refute claims 

mad* ; 


.i-.niey Utat Bell personnel. 

u ndof 

guise o* attempting to repair 

a teb.i 


•e bell chime, placed wiretaps 

m 1* Ui 


ee Be «<1 he had never 



the r pair wea k and that work 

d * *c • » ;i <>3 ** is bad \ »vr\ t alsif ietf. ' . 

Bi.-j? brought on repairmen, 
in-Tv'-t •> -uprirvisors, file clerks and 
v. \,rk UtMticn to refute Ashley's 


Mr: persons involved in issuance 

<d ;be * -..r*r and the actual repair of the 
Loll ». : jr»-cs ha vr- been nicknamed the 
'*h h Chirm; Brigade’' by other 
m hph- '•:«** cuimany employes. 

"•*“ :>lv palmed a company 
■r ; ‘p-Mr Paul Sickbert, who testified 
r*;, pjj.'i gone the former residence of 

at the urging of the new resident. He‘ 
said he also had a conversation with the 
next-door neighbor, Mrs. Flora Duvall. 

Mrs. Duvall had testified earlier that 
a repairman had told her a battery 
found in the Ashley yard had been used 
for wiretapping. 

Sickbert denied he had ever made 
such a statement. 

Ashley earlier had testified that he 
had put a halt to an illegal wiretap 
operation by Bell security forces irj St. 
Louis while he was general commercial 
manger. | ■ 

r Bell brought on Ted Umphres, the St. 
Louis security chief, who denied he had 
ever in his entire 17-year career with 
Bell placed a wiretap. He also denied 
Ashley, claims that* he reported to 
corporate headquarters. 

“I reported tb Mr. Ashley. He was my 
supervisor. He was a pretty good 
supervisor/' Urpphres said. 

: M' Ashltvys’ and clutched for wiretaps 


Southwestern Bell Telephone Co..’ 
unveiled its star witness Thursday as t 
its defense in a $4 million invasion of; 
privacy trial moved toward an end/ ' .*;£ 
Louis Bailey, Bell’s vice president; 
and comptroller from the St. Louis; 
corporate headquarters, took the stand/ 
to deny he had ever told the late T. Q . 
Gravitt, Bell’s Texas chief, he was; 
being wiretapped. c/ - ; ~ ^ . 

James Ashley, . the fired BeiU 
executive who is suing the telephone^ 
company, has contended throughout’ 
the lengthy trial that he knew he wair 
being wiretapped by Bell because 
Gravitt told him that both were being; 
monitored. ,-.••• 

Ashley has testified that Gravitt told; 
him that Bailey had ordered the; 

| Bailey said he came to San Antonio’ 
|he morning of Oct. 9, 1974, | and' 
instructed Bell’s San Antonio General 
Manager C. L. “Chet” Todd to place" 
Ashley under suspension. 

“Todd did not know about the (Bell) 
investigation before this time,” Bailey 
said. . ' */’*/• 

Bailey testified he then flew to Dallas 
in an attempt to talk with Gravitt, but 
discovered Gravitt had gone to the 
corporate headquarters in St. Louis. * 
Flying back to St. Louis,. Bailey said 
he met and talked with Gravitt at the 
St. Louis airport. 

‘T informed Mr. Gravitt about the; 
action taken in regards to Mr. Ashley* 
and urged that he continue in the 
investigation,” Bailey said. 

Bailey indicated Gravitt was aware 
of an internal Bell investigation at the; ' 
San Antonio office while Todd was not; Z) 
It is expected that Bailey is the last- 
defense witness before the case goes 
into jury deliberations in 57th District / 
Court. *. •; 

During Wednesday’s testimony, 
another Bell official testified Ashley^ 
vowed to a subordinate he was going to 
“embarrass Southwestern Bell by* 
becoming a knight in white armor — : 
the Ralph Nader of the telephone: 

industry.” - • ; >; 

[Jim, Reed, Bell’s San Antonio division: 
manager, made the statement during." 

. (Continued, Page 16, Col. 1.) 



FD-36 (Rev. .2-27-76) 



| | Immediate 
I | Priority 
I | Routine 





□ E F T 0 


Date 7/21/77 



SAC, SAN ANTONIO (72-NEW) (P) , , 

-.-bs^ M I) i ^ * e,-\ 

Baylor University Medical School, 

Houston . Tex-as : 


00J ■ 

00: San Antonio 

Enclosed for the Bureau are four (4) copies 
of a Letterhead Memorandum dated and captioned as above. 
Two (2) copies of the LHM are enclosed for Houston. 

One (1) copy is being furnished the U. S. Attorney, 

Western District of Texas, via separate communication. 

For the information of the Bureau and Houston, 
prior information related to the civil matters mentioned 
by victim have previously been furnished the Bureau under 
the initial caption "UNSUBS; Southwestern Bell Telephone 

Company : 2L CL ftRAVTTT Fnrmon Vip.p Prosidortt (Deceased) ; 

| Southwestern 

Bell Telephone Company, San Antonio, Texas, ELECTION LAW", 
SA file 56-185. Since 1975, numerous clippings concerning 
the lawsuits have been furnished the Bureau to reflect 
the notariety being received. One civil action involved 

2 - Bureau (Enc. 4) 
.,2 - Houston (Enc. 2) 
HfV San Antonio 

(2 - 72-New) ill 

<n>- 56-185) 


' I / . - ^ r. m ( £rl 

56 -//£ -7f 

Sea rched..-..— .. . 



' HOOL.KIt-'*-*-*' * 


Approved : 

Trans mi find 




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M3 H~Zl VS 


In Reply , Please Refer to 
File No. 



San Antonio, Texas 78296 

July 21, 1977 



Baylor University Medical School, 
Houston , Texas ; 


On July 19. 1977. I 

I I advised he 

represents the plaintiffs in a civil action, | 

The case has been a highly controversial one for the past 
few years. It had been heard in U. S. District Court in 
San Antonio, Texas, until the U. S. Supreme Court recently 
denied certori, at which time the matter was moved to the 
166th District Court of Texas, San Antonio, Texas, before 
Judge Peter Michael Curry. Trial in the matter is presently, 
scheduled to begin August 8, 1977. While in U. S. District 
Court, the matter was before Judge Adrian Speares . 

University Medical School, 12UU Moursund, Housto n - ;" Texas ', 
has contacted him concerning contacts by school officials 
in an attem pt to prevent him from testifying for the 

be any wrongful 
contacts with 

_ has retained him in the event there may 
act ivity . however, from the nature -of 

it appears the school officials may 

have obtained access to sealed court documents apdZac- may 


be pressured by the telephone company to prevent 

justice, he is making 
determine whether any federal violation exists . 


Since th e cont acts appear to be to obstruct 
available for interview to 

This document contains neither recommendations nor conclu- 
sions of the FBI. It is the property of the FBI and is 
loaned to your agency; it and its contents are not to be 
distributed outside your agency. 




On July 19> 1 
Houston. Texas . 770^2. [ 

1 aavisea ne is engaged m nis own 

at Baylor 

university meaxcai scnool. ne na s been engaeen ~nv the 
plaintiffs In the civil action of 

|versus Southwestern BeXT xeiepnone company, 
seeking million In damages for actions of the telephone 
company including causing the wrongful death of T. 0. 

Gravitt . The case had formerly been In U. S. District 
Court in San Antonio, Texas, however, following a ruling 
'of the U. S. Supreme Court, was moved to the l66th District 
Court of Texas. Trial is to begin August 8, 1977. 

I |advised his testimony concerns the 

wrongful death of Gravitt to support the plaintiff position. 
The testimony is lengthy and involved and much research has 
been conducted for this. He previously furnished a 
deposition to the U. S. District Court in about September, 
1976, along with numerous other persons, however, these 
depositions were sealed by Judge Speares at the time and 
should not have been made public. 

^>v f 

at which time these two individuals questioned him concerning 
his role as a witness in the case. They only asked a few 
questions, however, from the nature of the questions, 
their information would have had to come from the sealed 
depositions as none of this had been made public as...yet. 

Their questioning indicated to him that the y did not want 
him to testify in the matte r and if he did , I 
| | He made notes or the questions 

ana answers lmmeaiaueiy after the meeting which in 
substance are as follows : 

Q - What is your status on the Bell case? 

advised on January 7. 1Q77. he was contacted 


A - I am an expert witness for the plaintiff. 

Q - Do you know that Bell is an important and 
powerful corporation? 



Yes . 




And who is 

and how could 

she help us as opposed to Bell as to donations, 
influence, etc.? 

A - I have never met 

Q - You had never examined T. 0. Gravitt had you? 
You only met him once socially, isn't that 

A - I had not examined him formally . 

Q - You did a composite MMPF of some relatives 
did you not? 

A - Yes. 

Q - That type of testimony could jeopardize your job 

A - I am sorry, I do not understand. 

Q - You have to take into consideration your image,, 
politics, public relations and potential donors 
Your participation as a witness in this case 
would lead to separation from your job. 

A - I am naive about those things, I thought honest 
testimony should not be modified by these 
concerns . 


Do you know! 

testify for Bell? 

are going to 

A - No. 

Q - Well, they are important people and they have 
told us you are wrong. It would look bad to 
oppose them. 

A - I am sure something can be worked out. 




| [advised information concerning his 

contacts with Gravitt and preparation of the MMPF, 
character analysis of relatives, were in the sealed 
depositions and were not made public. During the meeting 
he professed ignorance to their line of questioning, 
however, he realized that someone, probably Bell Telephone, 
is applying pressure to prevent his testimony in the 
matter. The two officials indicated Bell Telephone were 
good contributors to the university and that should he 
testify, the school could not keep him and jeopardize 
this source of financing. He was also reminded his 
contract was to be renewed in July and he should consider, 
the matter further. 

|advised he has considered the matter 

and felt the school could do him great harm should he be 
dismissed from such employment. He does have his own 
practice, however, prefers to continue as an academician 
at this time. He has had his contract renewed for the 
coming one year, however, was told this would be 
dependent upon his actions in the Bell case. He has been 
told by others that to testify in the matter for the . 
plaintiffs would be professional suicide. He assumed 
this would be so since he wou ld be in opposition to tw o 
very prom inent psychiatrists, 


and because of the January meeting wiun scnool 

officials . 

| |advised the school has done some things 

since January to cause him monitary loss. There have been 
other things which he feels are related to that meeting, 
however, it would be difficult at this time to detail “ 
specifics. He is still considering whether to testify 
or not, however, in view of the trial date of August 8, 
1977, he must begin now to prepare since his testimony 
is quite involved. He is fearful that action will be 
taken against him and felt this pressure being a pplied 
to him is to obstruct justice. He had contacted] | 

I to protect his interests and to determine whether 
an.v criminal violation s may exist from the actions of 



■ ■ * I 

initiated through his attorney, [ 

requested th at anv conta ct with him be 

_ as he did not 

feel it would be appropriate for law en forcement office rs 
to trv t o reach him at the university as l 

would learn of the contact. 

On July 19, 1977, Assistant U. S. Attorney 
Bob Bennett, Western District of Texas, San Antonio,- 
Texas, was advised of the facts of this matter. He 
advised that initially it would appear that no federal 
violation is involved since the case is in State Court 
and the testimony involved will be in State Court. 

However, since the witness had given depositions in Federal 
Court and the meeting with school officials occurred while 
the case was still in Federal Court, there m ay be federal , 
jurisdiction in the matter. He will contact | | 

to further discuss the matter with him prior to making any 

On July 19, 1977, Assistant U. S. Attorney 
Bob Bennett, supra , advised that following a con tact 
with I I he is of the opinion that bothl 

from testifying in the matter. Upon receipt of the results 
of these interviews, he will decide whether any violation 

5 * 



T0: SAC, SAN ANTONIO (56-1 35) C 

FROM: SA(A) ^ 

RE: File No. 56-135 



I have reviewed this file, and under the criteria set forth in Part II, Section 3, 
of Manual of Rules and Regulations, this file should be: 

□3 Destroyed 

under the □ 120-day Rule □ 1-year Rule □ 5-year Rule [jg 10-year Rule 

□ Retained 

Justification for Retention is as Follows: 

Case Agent’s Initials 
Supervisor’s Initials